Covered call

Covered call — owning 100 shares and selling someone the right (a call option) to buy them at a set price (the strike) before a set date, collecting a cash premium today. The payoff shape is the whole lesson: upside capped at the strike no matter how far the stock runs, downside cushioned only by the premium. Since long-run equity returns cluster in rare violent up-moves, the strategy is structurally short exactly those — which is why the oldest S&P 500 covered-call ETF returned roughly half the index over 17 years. No PH retail options market exists; the concept matters for reading US-listed yield products marketed to Filipinos.

First used in: 2.4 · Yield is not free money