Covered calls & collars
PurposeIncome from shares you own
- Own sharesThe covered position
- Sell a callSet share sell price
- PremiumOption income
Trade-off Calls limit upside; shares can still lose value. Collars add a protective put.
How it works
Holds the shares and writes a call against them a week or a month out, or adds a put floor for collars to hedge downside; keeps the premium, rolls or lets the shares go when the call lands in the money.