Generate income from stocks you already own.
A covered call is an options strategy where you sell someone the right to buy shares you already own — at a set price, by a set date. In exchange for granting that right, you collect a premium upfront. That premium is yours to keep no matter what happens next. It's one of the most straightforward ways to put an existing stock position to work generating additional cash flow.
You start by owning at least 100 shares of a stock. You then sell a call option against those shares, choosing a strike price above the current price and an expiration date — typically a few weeks to a few months out. If the stock stays below the strike price at expiration, the option expires worthless and you keep the premium. If the stock rises above the strike price, your shares may be called away at that price — but you still keep the premium you collected.
Covered calls are generally suited to investors who already hold stocks they're comfortable owning long-term and who want to generate regular income from those positions. They tend to work well in flat or slowly rising markets. If you're patient, prefer steady income over speculation, and are open to learning how options pricing works, covered calls are a logical starting point in the broader world of options income strategies.
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