Get Paid to Wait

Turn your stocks into monthly income generators

Discover how much cash you could earn from stocks you already own through covered call writing — the income strategy used by professional investors

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What is a Covered Call?

A simple income strategy for stock investors — no complex trading required

A covered call is an options strategy that lets you earn extra income from stocks you already own. Think of it as getting paid to potentially sell your stock at a higher price.

The Simple Version:

You own a stock → You agree to sell it at a higher price → Someone pays you cash NOW for that agreement

How Does It Work?

Here's the complete breakdown in plain English:

  • You own 100 shares of a stock (like Apple, Tesla, or Microsoft)
  • You sell a "call option" — a contract giving someone else the right to buy your shares at a specific price
  • You collect a "premium" — cash paid to you immediately for selling that option
  • Two outcomes:
    • If the stock stays below your sell price → You keep your shares + the cash premium
    • If the stock rises above your sell price → You sell at a profit + keep the cash premium

In both outcomes: You keep the premium income. However, if the stock drops significantly, the premium only partially offsets your loss.

💡 Real World Example: Owning Apple Stock (AAPL)

Let's say you own 100 shares of Apple stock. Here's how you could generate income:

Stock
AAPL
Current Price
$210
Shares Owned
100
Your Investment
$21,000
Step 1: You sell a call option with a strike price of $220 (about 5% higher) expiring in 30 days
Step 2: You receive $400 in premium income immediately (paid into your brokerage account)
Step 3: Now you wait for 30 days. Two scenarios:
  • Apple stays below $220: You keep your 100 shares + $400. You can sell another covered call next month.
  • Apple rises above $220: You sell at $220 (a $10/share profit = $1,000) + you keep the $400 premium = $1,400 total profit in one month!
Premium Income
$400 = 1.9% return
That's 23% annualized if you repeat monthly. Results will vary based on market conditions.

What Happens in Different Market Conditions?

See how you profit in each scenario

📈 Stock Goes Up

Scenario: AAPL rises from $210 to $225

+$1,400 profit
  • Your shares get sold at $220 strike
  • Gain: $10/share × 100 = $1,000
  • Plus: $400 premium collected
  • Total: $1,400 profit (6.7%)

➡️ Stock Stays Flat

Scenario: AAPL stays around $210-215

+$400 income
  • Your shares don't get called away
  • You keep 100% ownership
  • Plus: $400 premium collected
  • You can repeat next month!

📉 Stock Goes Down

Scenario: AAPL drops from $210 to $205

-$100 loss offset
  • Stock value drops $5/share = -$500
  • Premium collected = +$400
  • Net loss: Only -$100
  • The premium cushioned your downside!

Covered Calls vs. Just Holding Stock

See why investors use this strategy

Feature Buy & Hold Only Buy & Hold + Covered Calls
Monthly Income ✗ None (unless dividend) ✓ Yes, premium income every month
Stock Ownership ✓ Keep shares indefinitely ✓ Keep shares (unless called away at profit)
Downside Protection ✗ Full market risk ✓ Premium reduces losses
Profit When Flat ✗ $0 gain ✓ Collect premium income
Annual Return Boost Stock appreciation only Stock appreciation + 10-30% from premiums
Unlimited Upside ✓ Yes ✗ Capped at strike price

Why Investors Use Covered Calls

💰

Generate Monthly Income

Typical premiums range from 1-3% per month, depending on the stock's volatility and market conditions. Actual returns vary.

🛡️

Reduce Downside Risk

Premium income cushions losses if the stock drops. You're getting paid to hold stocks you already planned to keep.

📊

Profit in Flat Markets

Traditional buy-and-hold makes $0 when stocks don't move. Covered calls let you collect income even when your stock trades sideways.

🎯

Set Your Exit Price

Choose the price you'd be happy selling at. If it hits, you sell at a profit and keep the premium. You control the exit price.

⚡

Easy to Execute

One-click trade in your brokerage account. No complex strategies or constant monitoring required.

🔁

Repeatable Strategy

As long as you hold the stock, you can keep selling covered calls month after month, stacking income over time.

⚠️ Important: Understand the Risks

Covered calls are relatively safe, but they're not risk-free. Here's what you need to know:

  • Limited Upside: If your stock skyrockets past your strike price, you miss out on those extra gains. You're capped at your strike price + premium.
  • Stock Can Still Drop: You still own the stock, so if it drops significantly, the premium only provides a small cushion. You'll still lose money on the underlying shares.
  • Assignment Risk: Your shares can be "called away" (sold) at any time if the option is in-the-money. You'll sell at the strike price, which is still a profit, but you lose the shares.
  • Tax Implications: Premiums and capital gains may have tax consequences. Consult a tax professional about your specific situation.
  • Not Suitable for Growth Stocks You Love: If you're holding a stock you believe will 10x, don't sell covered calls. You might get assigned and miss the massive gains.

Best For: Stocks you like but expect to trade sideways or rise moderately. Not for stocks you expect to explode higher.

Is This Strategy Right for You?

✓ Covered Calls Are Great If You:

  • Already own stocks in a brokerage account
  • Want to generate extra income from holdings
  • Are willing to sell your shares at a higher price
  • Have stocks you think will rise slowly or stay flat
  • Want to reduce risk and volatility
  • Have at least 100 shares of a stock (or multiples of 100)

⚠️ Probably Skip This If You:

  • Expect your stock to skyrocket soon
  • Can't afford to have shares called away
  • Don't understand options basics yet
  • Own fewer than 100 shares
  • Are hoping for unlimited upside potential
  • Want a completely passive, hands-off approach

Frequently Asked Questions

Q: How much money can I realistically make?
Typically 1-3% per month (12-36% annually) from premium income alone, on top of any stock appreciation. The exact amount depends on the stock's volatility, strike price distance, and time until expiration. High volatility stocks pay higher premiums.
Q: Do I need a special brokerage account?
Most major brokerages (Fidelity, TD Ameritrade, E*TRADE, Interactive Brokers, etc.) support covered calls. You'll need "Level 1" or "Level 2" options approval, which is easy to get — just apply in your account settings. Covered calls are considered low-risk, so approval is straightforward.
Q: What if my shares get "called away"?
This means your stock hit the strike price and you're selling at that level. This is actually a good outcome! You sold at a profit (since the strike is higher than where you sold the call) AND you keep the premium. You can then use that cash to buy back in or invest elsewhere.
Q: How often do I need to manage this?
Very minimal. Most investors sell monthly or quarterly calls and then let them expire. You might check once a week to see where the stock is. When the option expires, you decide whether to sell another one. Total time: 10-15 minutes per month.
Q: What strike price should I choose?
Most investors choose strikes 5-15% above the current stock price. Closer strikes = higher premium but more likely to be called away. Further strikes = lower premium but less chance of assignment. Our calculator shows you all options so you can compare and decide.
Q: Can I lose money?
Yes, if the stock drops significantly. The premium provides some downside protection, but you still own the stock and bear market risk. However, you'll lose LESS than someone who just held the stock without selling calls, because you collected the premium. The risk is in the stock itself, not the covered call strategy.
Q: Why don't more people do this?
Great question! Many investors don't know about it, or they're intimidated by options. Others want unlimited upside potential and don't want to cap their gains. But institutional investors and pros use covered calls constantly. It's one of the most popular income strategies for portfolio managers.
Q: What's the difference between monthly and quarterly expirations?
Monthly calls expire faster, so you can collect premiums more frequently but for smaller amounts per trade. Quarterly calls pay bigger premiums upfront but tie up your shares longer. Our calculator shows both so you can see which maximizes your annualized return.

How to Get Started

Four simple steps to start earning income from your stocks

1

Sign In Free

Create your account in seconds. No credit card required.

2

Enter Your Ticker

Type any stock symbol (AAPL, TSLA, NVDA, etc.) you own or want to analyze.

3

See Your Options

Get instant analysis with real-time premiums, returns, and expiration dates.

4

Execute in Your Brokerage

Take the strike and expiration you like and place the trade in your account.

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Disclaimer: This tool is for educational purposes only and does not constitute financial advice. Options trading carries significant risk and may not be suitable for all investors. Past performance does not guarantee future results. Consult with a licensed financial advisor before making investment decisions.