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Buy-write

Buying stock and selling a call against it in one order, entered as a package so the net debit is known before either leg fills.

Payoff of a covered call at expiryThe shares' straight diagonal line, lifted by the premium and then flattened above the strike.Profit / loss per share08595100120Strike 110Shares aloneBreakeven 97Max profit 13no gain above 110Loss grows as the stock fallsUnderlying price at expiry
Covered call: payoff at expiry. Shares bought at 100 with a 110 call sold for 3. The 3 cushions the downside to a 97 breakeven, but everything above 110 belongs to the call buyer, so profit stops at 13 while the loss below still follows the shares.

A buy-write is a covered-call established in a single transaction rather than in two. The distinction is execution, not structure: you quote the combination on the complex-order-book and pay one net price, so you never own unhedged stock between the fills.

This matters more than it sounds. Legging into a covered call in a fast market can cost more than the call premium itself, especially in a wide-spread name. The package price also makes the arithmetic honest, because the net debit is your true cost basis.

Example: XYZ at $50.10, the 30-day $52.50 call at $0.95. Rather than buying shares and then selling the call, you send a buy-write at a $49.15 net debit for 100 shares plus one short call. Fill or no fill, you are never exposed to a gap between the two legs.

Related: covered-call, combo-order, complex-order-book, covered-call-fund

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