A covered call is an options trading strategy where an investor sells call options on a stock they already own. This approach allows investors to generate additional income from their stock holdings by collecting premiums from the sale of call options. Professional investors frequently use covered calls to enhance investment returns, but individual investors can also benefit from this conservative yet effective strategy by understanding its mechanics and knowing when to deploy it . Key InsightsKey Takeaways Generate Income: Covered calls are used to generate income when investors believe stock prices will remain stable or rise slightly. Long Position and Call Selling: The strategy involves holding a long position in a stock and then selling call options on the same stock. Limited Upside, Some Protection: While covered calls limit the potential upside profit, they provide some protection against minor declines in stock prices. How a Covered Call Works As a stockholder, you have sever