The covered call strategy is popular among investors seeking additional income from their existing stock holdings. By selling call options, the investor collects premiums, which can generate extra income. This strategy is often used when the investor expects modest price appreciation in the underlying asset and is willing to cap potential upside in exchange for premium income. The downside risk is that the asset could be called away if its price exceeds the strike price, meaning the investor would have to sell the stock at that price.
