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An options strategy where an investor holds a long position in a stock and sells (writes) call options on that same stock to generate income.
The covered call is one of the most popular options strategies because it generates income with limited additional risk. If you own 100 shares of XYZ at $50 and sell a call with a $55 strike price for $2, you collect $200 in premium. If the stock stays below $55, you keep the premium and the shares. If it rises above $55, your shares get called away at $55, and your total return is the $5 gain plus the $2 premium. The tradeoff is that you cap your upside at the strike price in exchange for immediate income.