Overwrite

AAA

DEFINITION of 'Overwrite'

A type of covered-call strategy that consists of writing call options on stocks that the writer already owns to generate maximum current income from options premiums and dividends.

INVESTOPEDIA EXPLAINS 'Overwrite'

The covered-call options strategy is achieved either by simultaneously purchasing the shares and writing options (known as a "buy-write") or by writing the options on shares that the writer already owns (the overwrite).

Usually an investor with a market opinion of neutral to slightly bullish will employ this option writing strategy.
RELATED TERMS
  1. Buy-Write

    A trading strategy that consists of writing call options on an ...
  2. Call Option

    An agreement that gives an investor the right (but not the obligation) ...
  3. Covered Call

    An options strategy whereby an investor holds a long position ...
  4. Underlying

    1. In derivatives, the security that must be delivered when a ...
  5. Option

    A financial derivative that represents a contract sold by one ...
  6. Derivative

    A security whose price is dependent upon or derived from one ...
Related Articles
  1. No results found.
comments powered by Disqus
Hot Definitions
  1. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  2. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  3. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  4. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  5. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  6. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
Trading Center