What does it mean to write a covered call?

Writing a covered call means you’re selling someone else the right to purchase a stock that you already own, at a specific price, within a specified time frame. Because one option contract usually represents 100 shares, to run this strategy, you must own at least 100 shares for every call contract you plan to sell.

How do I write covered calls?

While simpler than most option strategies, writing covered calls still requires a basic understanding of options and how they work. You must also select the right stocks, choose the right strike price and expiration date, and carefully manage option positions.

What is a covered call option strategy?

Individual investors can also benefit from the conservative but effective covered call option strategy by taking the time to learn how it works and when to use it. A covered call is a popular options strategy used to generate income for investors who think stock prices are unlikely to rise much further in the near term.