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.

Nearby Terms

Uncollectible account Unconfirmed Letter of Credit Uncovered call Uncovered call writing Uncovered options

Getting Started In Stocks
Investopedia
The NASDAQ Dozen
Learning Markets
The 10 Commandments Of Investing
Investopedia
The Lowdown On Penny Stocks
Investopedia
10 Things To consider Before Selecting An Online Broker
Investopedia
Start Investing With Only $1,000
Investopedia

Term of the Day

RSS

Debit spread
Applies to derivative products. Difference in the value of two options, when the value of the option bought exceeds the value of the one sold. One buys a "debit spread." Antithesis of a credit spread.

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