Covered calls are a type of options strategy in which an investor sells (or “writes”) a call option while simultaneously owning the underlying asset. This strategy can be used to generate income from the sale of the option premium, while also limiting the potential upside of the underlying asset.
Covered calls are often used by investors who are bullish on the underlying asset but believe that it is unlikely to appreciate significantly in the near term. By selling a call option, the investor can collect a premium from the buyer of the option, while also retaining the potential to profit if the underlying asset does appreciate.
