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Covered Call Strategy Explained

By Allen Krewzz
Published July 4, 2026Updated July 4, 2026
Covered Call Strategy Explained

What Is a Covered Call?

How the Strategy Works

Why Investors Use Covered Calls

The Key Trade-Off: Capped Upside

A covered call is not designed for scenarios where you expect a stock to surge dramatically. It's better suited for a neutral-to-moderately-bullish view where generating steady income is the priority.

Downside Considerations

Managing a Covered Call Position

Common Mistakes

Conclusion