International Business Machines (IBM)

[Slightly Bullish, High Risk, Limited Reward] A covered call is a neutral to slightly bullish option strategy where you expect the underlying security to increase in value. The covered call option strategy is used to generate income, where you cover the option position by owning the underlying security. A covered call involves selling a call option at a strike price above the underlying price to collect a premium. The opportunity loss of a covered call would be if the security price increased significantly above the strike price, as your gains are capped. Profit is limited to the premium received for the short call plus the difference between the strike value and security price. Risk is the depreciation in the price of the underlying security. Maximum profit is achieved if the security price increases to the strike price at expiration.