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Key Takeaways

• A covered call is a popular options strategy used to generate income in the form of options premiums
• Investors only expect a minor increase or decrease in the underlying stock price for the life of the option when they execute a covered call
• To execute a covered call, an investor holding a long position in an asset then writes (sells) call options on that same asset
• Covered calls are often employed by those who intend to hold the underlying stock for a long time but do not expect an appreciable price increase in the near term
• This strategy is ideal for investors who believe the underlying price will not move much over the near term