UBS: "Let the seller beware" in covered call overwriting

Covered Call overwriting? With stock markets moving sharply lower and then higher, now is a challenging time to sell call options on individual names where the investor owns the stock, says a UBS report. But then again, with the proper stock selection – choosing shares that are not likely to spike in value – the investor could be handsomely rewarded, but be careful.

"Let the seller beware" in covered call overwriting

“Caveat Venditor,” or “let the seller beware” is what the UBS report on overwriting long equity positions with short options says. “After a steady drumbeat of soft economic news amid ongoing concerns about China and the...