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Trading Terms

Covered Write

When writing a call against a long position in the underlying stock, the goal is to receive a premium in order to gain additional return on the common stock or provide some protection against a decrease in the stock's value. This protection is limited to the premium amount minus any transaction costs. By taking this step, the writer is able to potentially increase their gains or mitigate potential losses.

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Covered Write - What is Covered Write, Meaning, Definition | Angel One