Glossary

Covered call

Owning an underlying and selling a call on it: the premium is income, but gains above the strike are given up.

Short call at expiry Payoff of the short call in a covered call: the premium is kept below the strike, losses grow above the breakeven unless the shares cover them. Profit Loss 60 100 140 Underlying price at expiry Max gain 5 Breakeven 105

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