📘 Covered Call Strategy

📌 What is a Covered Call?

A Covered Call is an options strategy where the trader owns the underlying stock or index and simultaneously sells a Call option on it. This strategy is typically used to earn premium income while holding a long position.

🛠️ Strategy Structure

• Buy 100 shares of stock (or hold long position)
• Sell 1 Call option (same stock, same expiry)

📊 Example

Assume a stock is trading at ₹100:

• You buy 100 shares at ₹100
• You sell a Call option with a strike price of ₹110 for ₹5 premium

If the stock stays below ₹110, the Call expires worthless and you keep the premium.

💰 Profit and Loss

• Maximum Profit: Strike Price - Stock Buy Price + Premium
• Maximum Loss: Unlimited downside from holding the stock (minus the premium received)

📉 Breakeven Point

• Stock Purchase Price - Premium Received

📌 Summary Table

Component	Details
Market View	Neutral to moderately bullish
No. of Legs	2 (1 stock, 1 call)
Risk	High (stock can fall)
Reward	Limited
Break-even	Stock Price - Premium
Expiry	Same for both call and holding period