Uncovered call

Definition:

A short call option position in which the writer does not own shares of underlying stock represented by the option contracts. Uncovered calls are much riskier for the writer than a covered call, where the writer of the uncovered call owns the underlying stock. If the buyer of a call exercises the option to call, the writer would be forced to buy the asset at the current market price. Also called a "naked" asset.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Post

Particular place on the floor of an exchange where transactions in stocks listed on the exchange occur.

Subscribe to the Term of the Day via email Get the Term of the Day in your inbox!


Create your free portfolio