Covered Call

A covered call is an investment strategy where an investor owns shares of a stock and sells a call option on that same stock. By doing this, the investor earns a premium (income) from selling the option. If the stock price stays below the option's strike price, the investor keeps the premium and the stock. If the price rises above the strike, the investor may have to sell the stock at the strike price, but still keeps the premium. This strategy generates income while providing some downside protection, but limits the upside if the stock's value increases significantly.