Covered Call
Selling a call against 100 shares you already own to collect premium.
A covered call pays you cash today in exchange for agreeing to sell your shares at a higher price. If the stock stays below the strike, you keep the premium and the shares. If it rises above, your shares are sold at a profit, but you give up any gain beyond the strike. It is an income strategy, not a hedge: it caps your upside and barely dents your downside.
For example
You own 100 shares at $20 and sell a $23 call for $70. Below $23 you keep the $70 and the shares. Above $23 you sell at $23 (a nice profit) but miss any run higher.
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