What is covered call?Covered Call

Selling 1 call against 100 shares you own to collect premium; you earn extra if the stock stays flat, but if it soars your shares are called away at the strike and your gain is capped.

Learn “covered call” in an animated lesson

Options: Next Steps
Covered Calls: Collecting Rent on Your Shares
You already hold 100 shares, so you sell 1 call to collect a premium. If the stock doesn't rise you earn extra income; if it soars, your shares get bought at the strike. You trade upside for cash.

Related terms

strike price
premium
breakeven
exercise
protective put
assignment

See how “covered call” works for yourself with an animation you can drag and play.

Go to “Covered Calls: Collecting Rent on Your Shares”