IntermediateStock Alerts + Tools0:46Derivatives
Selling the Upside You Already Own
A covered call collects premium in exchange for capping the gain, which makes it a trade about the distribution, not a free yield.
0:46 · 6 scenes
This lesson is part of a Stock Alerts + Tools plan.
What the lesson covers
- 0:00A covered call is not free income. You are selling something real.
- 0:05The structure. Own the shares, sell a call above the price, and collect the premium now.
- 0:14The three outcomes. Below the strike you keep everything. Above it, your gain stops there.
- 0:24The risk that stays. The downside is entirely unchanged. The premium is a small cushion, not protection.
- 0:33When it makes sense. When you expect a flat market and would be content to sell at the strike.
- 0:41Only write the call at a strike you would genuinely be happy to sell at.
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Educational content only. MadStockAlerts provides market commentary, research, and educational content. It is not personalized investment advice, and nothing here is a recommendation to buy or sell any security. Trading and investing involve substantial risk, including loss of capital. See the Risk Disclosure and Customer Agreement.