Covered Call
Outlook: Bullish
Hedging and income
Long 100 shares + short 1 call above the price. Income trade against held shares.
Max profit
(Short strike - share basis) + premium collected.
Max loss
Share basis - premium (reached if shares go to zero).
Breakeven
Share basis - premium.
Legs
Long
1×
stock
Short
1×
call
ATM +5
Structure
Long 100 shares of the underlying + short 1 OTM call.
When to use
You hold the shares, want monthly income, and are willing to sell at the call strike if it gets there.
Example
Long 100 SPY @ $450 + short 455 call $3. SPY ends at $460 → shares called away at $455 + $300 premium = $800 cycle profit.
Notes
- Caps upside at the strike. Best for low-conviction-high holdings or income overlays.
Build it in the simulator
Open this structure in the app, adjust spot, IV, and DTE, and watch the payoff and Greeks move.
Get the appRelated strategies
Protective Put
Long 100 shares + long 1 put. Floor under the position; payoff identical to a long call.
Collar
Long 100 shares + long put below + short call above. Caps both sides; near-zero net cost possible.
The Wheel
Cycle: cash-secured put → assignment → covered call → assignment → repeat. Systematic income.