the term covered call refers to a financial transaction in which the investor selling call options owns an equivalent amount of the underlying security. a covered call serves as a short-term hedge on a long stock position and allows investors to earn income via the premium received for writing the option. the option caps the profit on the stock, which could reduce the overall profit of the trade if the stock price spikes. the maximum profit of a covered call is equivalent to the premium

day trading usually refers to the practice of purchasing and selling a security within a single trading day. the profit potential of day trading is an oft-debated topic on wall street. though the success stories of those who struck it rich as a day trader often get a lot of media attention, remember that this is not the case for most day traders: many will fizzle out, and many will just barely stay afloat. here are some of the prerequisites required to be a successful day trader. day traders

according to the u.s. securities and exchange commission, a penny stock is any stock that trades at or below $5 per share. if you purchase 10 shares of the stock that is priced at $100 and the price soars by $1 per share, you will have earned a profit of only $10. it seems appealing that you can purchase shares of a company for a very small price, and if it just rockets to the same price as amazon one day, you become filthy rich. the key thing to keep in mind about penny stocks trading is that

[1] the idea of index arbitrage is to exploit discrepancies between the market price of a product that tracks the index (such as a stock market index future or exchange-traded fund) and the market prices of the underlying index components, which are typically stocks. [4] if the stock market index future is trading above its "fair value", the arbitrageur can buy the component stocks and sell the index future. likewise, if the stock market index futures is trading below its "fair value", the

pattern day trader rules: (see complete definition) the pattern day trader (pdt) rule states that if a trader takes 3 or more day trades in a 5 day period, they are a day trader and they must maintain a minimum account balance of $25,000 usd. this means traders think the price of stocks or a specific stock will be going down. this means they have a “long” position and expect the stock to go up. the shares have been borrowed from the broker to sell in advance, with the intention of buying the