Covered Bear

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.

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Related Definitions

  1. Covered Call

    An options ...
  2. Covered Straddle

    An option ...
  3. Naked Position

    A securities ...
  4. Underlying

    1. In ...
  5. Bear

    An investor who ...
  6. Bear Market

    A market ...
  7. Volatility

    1. A statistical ...
  8. Risk Capital

    Investment funds ...
  9. Price Risk

    The risk of a ...
  10. Cum Rights

    A shareholder of ...

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 Options Trading Strategy

    This different approach to the covered-call write offers less risk and greater potential profit.
  4. An Alternative Covered Call: Adding A Leg

    Try this approach to covered calls to increase your potential for profit in any market.
  5. 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.
  6. The Basics Of Covered Calls

    Learn how this simple options contract can work for you, even when your stock isn't.
  7. 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.
  8. Retirement Savings Tips For 35- To 44-Year-Olds

    Learn how the "sandwich generation" can save for retirement while taking care of their kids and parents.
  9. Derivatives 101

    Learn how to use this type of investment as an alternative way to participate in the market.
  10. Risk Tolerance Only Tells Half The Story

    Just because you're willing to accept a risk, doesn't mean you always should.

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