Selling a call on shares you own: steady monthly income. Assignment means your shares are sold at the strike.
The structure
A Covered Call (Covered Call) combines two positions: owning 100 shares and selling a call option on them. You collect the premium now in return for agreeing to deliver the shares at the strike price if called. The shares you own are the cover that makes the obligation safe.
When to use it
When your view is neutral or mildly bullish on a stock you already own: the premium is extra income on the portfolio in a sideways market. The price is giving up any rise above the strike.
Maximum profit and loss
Maximum profit: the premium plus the distance from the purchase price to the strike. The loss is that of a stock holder minus the premium collected, so the protection is partial, not complete.
Hypothetical example
100 shares bought at $95 and a call sold at a $100 strike for a $2 premium: if the stock sits at $97 until expiration, you keep the whole premium and the shares. If it jumps to $110, the shares are delivered at $100 and your gain is $7 per share. Anything above that goes to the option holder.
Common mistake
Selling a strike very close to the price on a stock you want to keep: the first rally takes your shares. Choosing the strike is the real trade-off between income size and the chance of assignment.
Where its real cost lies
The risk is not in the money but in the upside given up: if you sold a cap at one level and the stock jumps far above it, you collected a small premium and missed a big move. So pick the cap at a level where you would gladly sell, not at the nearest tempting premium.
Where to see it on the platform
The options calculator lists it among the ready-made strategies with its profit chart, and the strategy picker suggests it in a calm, sideways market regime with low volatility.
The calculator shows the profit cap and the break-even point. The Gamma dashboard shows the wall levels where such caps tend to sit.
