The covered call options strategy is popular among stock market investors. A covered call is composed of selling or writing a call option against 100 shares of the underlying stock, which effectively reduces cost basis of holding the shares and creates protection if the price of the stock were to tick lower. If the stock price does not breach the call's strike price at expiration, the investor will make a 100% profit on the premium they collected when selling the call option. If the stock price ends up above the short call's strike price at the time of expiration, the investor will be have to sell their shares of stock at the call's strike price. As you can see this will cap potential profit if the share price rises. However this strategy protects the seller of the call option if the stock price were to decline. This strategy can be an alternative to just buying and holding dividend stocks. Hope you enjoy. Thanks!!

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