What is Overwrite

BREAKING DOWN Overwrite

Overwrite Option Procedures

Overwrite Speculation

. Overwriters can choose various strike prices and expirations.   Payoffs for selling a call option include the immediate credit for the option sale and are known as net credit transactions since the writer is paid upfront. Some investors may want to write out of the money calls to profit from the option sale.   If an investor is bullish on the underlying stock they would want to write a call with a relatively high strike price that allows them to benefit from the option and only detracts a small amount at exercise from the transfer. Generally, an investor in an overwrite option will always seek to obtain the maximum value from the option, thus selling it at a higher price than they bought it for initially. Some investors who are bullish only in the short term may want to write a call to sell the stock at its, peak gaining both from the option premium and the sale profit.