Keep well covered
Article Abstract:
Covered writing is a technique that can be used for investing in options. This technique allows the option writer to retain the option premium and the writer has to assume the obligations of the option in return for this. Investing in options does not always bring profits due to timing of realization of gains, erosion from bid-offer spreads, or lack of movement of shares. These problems are tyackled by covered writing. Not all UK brokers will allow investors to undertake option writing.
Publication Name: Investors Chronicle
Subject: Business
ISSN: 0261-3115
Year: 1997
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Disciplinary proceedings
Article Abstract:
Investing in options should be carried out using guidelines. Investors should set realistic levels of losses and gains and act when these points have been reached. Options involve more risk when they do not have long to run, since their prices can change more rapidly closer to the end of their lives. Options with a long time to run are a safer investment, minimising loss risks. Option prices are also affected by the volatility levels for underlying shares.
Publication Name: Investors Chronicle
Subject: Business
ISSN: 0261-3115
Year: 1997
User Contributions:
Comment about this article or add new information about this topic:
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