Sebi allows mutual funds to write call options under certain conditions

The Securities and Exchange Board of India (Sebi), in a circular on Wednesday, said that mutual funds (MFs) may write call options under a covered call strategy.
 
Covered calls are a strategy in which an investor holds a long position in an asset and sells call options on that same asset to generate an income. A call option is a contract where the holder has the right, but not the obligation to buy the underlying asset. 
 
The MFs will only be able to write call options of stocks that are part of the benchmark indices. Sebi laid down