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Finance Glossary

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Over 700 finance terms, Shmooped to perfection.

Covered Options


Selling options when you have enough of that stock or security to protect (or cover) your butt if the price on the stock changes a lot.

If you sell call options and actually have the stock, you aren't going to be happy if the stock rises because you'll lose the stock, which is more valuable now. But at least you won't have to "cover" the stock in the market at a higher price.