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Covered Bear

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Dictionary Says

Definition of 'Covered Bear'

A trading strategy in which a short sale is made on a long position. A covered bear is a covered strategy where the investor shorts a stock that they already own. When an investor uses this strategy he feels that the stock is a bear stock and will decline in value. The risk involved in this strategy is limited because the investor already owns the underlying stock and can use those shares to cover.
Investopedia Says

Investopedia explains 'Covered Bear'

Investors can also write and purchase options as a type of covered bear strategy. Covered option trades afford investors more protection than a naked trade where the investor does not own the underlying security that he is hedging against. If the price of the underlying security doesn't fall, then the investor can let the option expire.

Articles Of Interest

  1.

    Cut Down Option Risk With Covered Calls

    A good place to start with options is writing these contracts against shares you already own.

  2. Naked Call Writing: A Risky Options Strategy

    Learn about this aggressive trading strategy to generate income as part of a diversified portfolio.

  3. An Alternative Covered Call: Adding A Leg

    Try this approach to covered calls to increase your potential for profit in any market.

  4. The Basics Of Covered Calls

    Learn how this simple options contract can work for you, even when your stock isn't.

  5. An Alternative Covered Call Options Trading Strategy

    This different approach to the covered-call write offers less risk and greater potential profit.

  6. Trade The Covered Call - Without The Stock

    The standard covered call can be used to hedge positions or generate income. This calendar spread may do so more effectively.

  7. Options Hazards That Can Bruise Your Portfolio

    Learn the top three risks and how they can affect you on either side of an options trade.

  8. Arbitrage Squeezes Profit From Market Inefficiency

    This influential strategy capitalizes on the relationship between price and liquidity.

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