Hello, A covered call is an options strategy that involves both stock and options. It is used to generate income from an existing stock position by selling call options against the stock. The investor receives a premium for selling the option, but also gives up some of the upside potential of the stock if it rises above the strike price of the option. To illustrate how a covered call works, let's look at an example. Suppose you own 100 shares of XYZ Corporation at $50 per share. You could sell one call option contract with a strike price of $55 for a premium of $2 per share. This means you would receive $200 in premium income ($2 x 100 shares). If XYZ Corporation's stock price stays below $55, then you keep the premium and can repeat this strategy again in the future. However, if XYZ Corporation's stock price rises above $55, then your shares will be called away and you will have to sell them at $55 per share. In summary, a covered call is an options strategy that involves both stocks and options and is used to generate income from an existing stock position by selling call options against it. The investor receives a premium for selling the option but also gives up some of the upside potential of the stock if it rises above the strike price of the option. I hope this helps!