Finance glossary
Covered Call
Definition
Selling a call option against stock you already own to earn premium.
In a covered call, an investor holding shares sells call options on them to collect premium income. It generates yield and cushions small declines but caps upside if the stock rises above the strike. It is a popular income strategy in flat or mildly bullish markets.
In a sentence
She sold a covered call on her shares to collect premium income while she held the stock.
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