Options & derivatives
Covered call
A covered call means selling a call on shares you already own, to collect a premium.
A covered call means selling a call on shares you already own, to collect a premium.
It is an income strategy: you pocket the premium in exchange for agreeing to sell your shares if the price exceeds the strike. You cap your upside but collect steady income. Moderate risk, since you own the shares.
You hold 100 shares at $50 and sell a $55-strike call: you collect the premium right away.
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