Most options explainers focus on the buyer’s side of the trade — paying a premium for the right to buy or sell a stock later. A covered call flips that around: an investor who already owns shares sells someone else that right, and collects the premium immediately. It’s one of the most widely used ways individual investors and funds try to generate extra income from stock they already hold, and it comes with a specific, mechanical trade-off that the “easy income” pitch for it tends to leave out. Here’s exactly how the position is built, what it pays, and what it costs when the stock does the thing you didn’t plan for.
