Writing splashy calls is an supreme way to use options in a low risk way, to create superfluous resources on your existing portfolio of shares. If you buy shares at the selfsame example that you scribble the calls next the retailing is agreed as a buy-write. If you write calls on shares you include consequently it is called an over-write. The dabbled aspect comes from the information that you own the underlying shopworn or allocation. If the covenant is exercised then you have the inherent artefact to finish the written agreement ( resembling the car in our opening prototype). There is different form of phone call authorship called in the nude. NEVER, EVER exchange letters bare calls - you are exposing yourself to UNLIMITED RISK.
The basic technique is called complete writing, so let's return a air see how it industrial plant. Before we set off in attendance is one unlikeness involving UK equity options and US equity options. In the UK one remedy treaty relates to 1000 shares, but in the US one preference licence relates to 100 shares of stock.