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Protective Call

Call bought to hedge short stock position

What is Protective Call?

Protective Call Buying a call option to protect a short stock position against an adverse upward price move. The call caps the maximum loss on the short stock at the call strike price plus the premium paid. This is the short-stock equivalent of a married put for long stock positions.

Complete Definition

Buying a call option to protect a short stock position against an adverse upward price move. The call caps the maximum loss on the short stock at the call strike price plus the premium paid. This is the short-stock equivalent of a married put for long stock positions.

Related Terms

Married Put Collar Call Option Short Selling

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