If you own 100+ shares of a stock, you're sitting on a source of income most investors never tap. It's called a covered call, and it's the most widely used options strategy in the world — used by pension funds, endowments, and millions of individual investors.
5 minute read · No jargon · No prior options knowledge needed
You own shares of Apple. They sit in your brokerage account, and unless the price goes up, they don't do much for you.
A covered call lets you sell someone the right to buy your shares at a higher price by a specific date. In exchange, they pay you cash today — called the premium.
If the stock stays below that price? The contract expires, you keep your shares AND the premium. If the stock goes above that price? Your shares get sold at the agreed price — you keep the premium plus the gains up to that point.
The premium from our example isn't a one-time thing. You can sell a new covered call roughly every month. The honest question is: how much does that actually add up to?
It varies: by stock, by the strike you choose, and by how volatile the market is. Some months a call pays well, some months the engine skips, and sometimes a call ends with your shares sold at the strike. Because the answer depends so much on those things, we don't publish a single figure for it here.
Covered calls have one tradeoff, and it's important to understand: you cap your upside above the strike price.
In our AAPL example, if the stock rockets to $300, your shares are still sold at $265. You miss the move from $265 to $300. You kept the $350 premium and the $1,500 gain to $265, but you didn't get the extra $3,500.
This is why covered calls work best when you're happy to own the stock at its current price and you'd be comfortable selling it at a higher price. It's income-first investing: you're choosing consistent monthly cash flow over the possibility of catching a rare big move.
Covered calls are the simplest options strategy. They're approved for IRA accounts. They've been used by institutions for decades. But most retail investors don't use them because the execution feels intimidating:
These are real questions with real answers — but figuring them out on your own means wading through options chains, greek letters, and broker interfaces designed for traders. That's the gap Income Factory fills.
You tell us what stocks you own. Every month, we tell you:
No options chain to decipher. No Greek-letter formulas to memorize. Just clear instructions you can act on in minutes at your broker.