Covered Call

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WHAT IT IS

A financial transaction where an investor sells call options on the equivalent notional of the underlying security owned.

HOW IT WORKS

1. Covered calls are a neutral strategy. They are used to generate income in the form of options premiums.

2. It is only used when a minor increase or decrease in the underlying security price is expected for the life of the option.

3. The amount does not exceed the amount of the underlying.

4. Strikes are selected where the investor would be happy to sell the security.

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CIBC Private Wealth” consists of services provided by CIBC and certain of its subsidiaries through CIBC Private Banking; CIBC Private Investment Counsel, a division of CIBC Asset Management Inc. (“CAM”); CIBC Trust Corporation; and CIBC Wood Gundy, a division of CIBC World Markets Inc. (“WMI”). CIBC Private Banking provides solutions from CIBC Investor Services Inc. (“ISI”), CAM and credit products. CIBC Private Wealth services are available to qualified individuals. Insurance services are only available through CIBC Wood Gundy Financial Services Inc. In Quebec, insurance services are only available through CIBC Wood Gundy Financial Services (Quebec) Inc.

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