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What is a Covered Call?

The covered call strategy explained simply — how to sell call options against stock you own to generate regular income.

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  • Generate income by selling calls against stocks you own

The same thing, in writing

A covered call is one of the most popular options strategies for generating income. You own 100 shares of a stock and sell a call option against it. You collect the premium immediately as income. If the stock stays below the strike price at expiration, you keep the premium and your shares. If it goes above, your shares get called away at the strike price — but you still profit from the premium plus any gains up to the strike.

Topics

  • covered call
  • income strategy
  • beginner
  • options basics
By Ryan Silk & Lawrence Polatchek Last reviewed . Methodology is published in full.

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The rest of the series, and the written guides behind what you just watched.

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Strategies Covered CallThe structure, its risk and when it pays. Tools Covered Call CalculatorRun the same calculation yourself. All videosEvery walkthrough and clip, sorted by topic. Learning centreEvery guide, ordered from first principles up.

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