Graduated call writing

Graduated call writing

Selling covered call options at incrementally rising exercise prices, so that as the price of the underlying stock rises and the options are exercised, the seller receives a higher average price than the original exercise price.

Graduated Call Writing

The investment strategy of writing covered calls, which are calls where the writer owns the underlying asset, and gradually increasing the strike price as the price of the underlying asset rises. For example, if one writes a covered call with a strike price of $20 which expires unexercised, but the price of the call has still risen, the writer may issue another call on the same asset with a strike price of $25. This process continues until an option is exercised. Graduated call writing allows the writer to collect the premiums and eventually sell the underlying asset for a higher price.