Covered Call

An options strategy in which an investor who owns the underlying stock sells call options against that position to generate income from the premium. It is one of the most popular and conservative options strategies, often used by long-term investors to enhance yield on stocks they intend to hold. The risk is that if the stock rallies above the strike price, the shares will be called away, capping the upside. Many retirees and income-focused investors use covered calls systematically.