A covered call is an options trading strategy in which an investor holds a long position in an asset and sells call options on that same asset in an attempt to generate income. The strategy is called "covered" because the investor owns the underlying asset, which is used to cover the obligation to sell the asset at the agreed-upon strike price if the call option is exercised. Overall, covered call strategies can be a useful way for investors to generate income from their holdings while also limiting their potential downside in the event of a stock price decline.
Max Profit: Maximum profit is limited to strike price of the short call option minus the purchase price of the underlying security, plus the premium received.
Max Loss: Maximum loss is limited to the the purchase price of the underlying security minus the premium received.