Learn How To Do Covered Call

Covered Call Income Generating Stratergy

A covered call is an options strategy where an investor sells a call option on a stock they already own. It generates income through the option premium while limiting upside potential. If the stock stays below the strike price, the investor keeps both the shares and the premium. If the stock rises above the strike, the shares may be sold at the strike price, but the premium still adds to the total return. This strategy works best in sideways or moderately bullish markets.

How It Works

You own 100 shares of a stock.
You sell 1 call option contract (each contract = 100 shares).
You receive a premium upfront.
If the stock stays below the strike price, you keep the shares and the premium.
If the stock rises above the strike, your shares may be sold (assigned), but you still keep the premium.

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