The seller of a COVERED OPTION that either owns the UNDERLYING ASSET (deliverable under a CALL OPTION) or has sufficient cash on hand to acquire the asset (under a PUT OPTION) should EXERCISE occur. A covered writer seeks to earn PREMIUM income on a relatively low RISK basis. See also NAKED WRITER.

More On This Topic

Link to This Definition
Did you find this definition of COVERED WRITER helpful? You can share it by copying the code below and adding it to your blog or web page.
Written and fact checked by The Law Dictionary