Covered calls
This section covers selling covered calls: collecting premium on shares you already own and would be content to sell at the strike. It assumes you hold individual stocks and have a brokerage account approved for covered calls. If you are still deciding whether to own individual stocks at all, start with the Investing section first.
Cash-secured puts are a separate income decision and live in their own section, linked below.
Start here
Section titled “Start here”- How covered calls work: What you sell, the premium you collect, and the obligation you take on when you sell a call against 100 shares.
- Choosing a strike: How the strike you pick trades premium against the upside you keep, and the conditions that move that balance.
Go deeper
Section titled “Go deeper”- When you get assigned: When the buyer exercises, how your shares are called away at the strike, and why assignment is often the planned outcome.
- Rolling covered calls: Buying back a call near expiration and selling a later one, when that makes sense, and when closing instead is the better move.
- Covered-call example: One position carried from setup to outcome, with the premium, dividends, and capital result at each step.
Cash-secured puts
Section titled “Cash-secured puts”- Cash-secured puts: Selling puts on cash you have set aside to buy a stock you would be glad to own at a lower price.
Covered calls and cash-secured puts are two independent income decisions, each judged on its own merits. Some traders chain them into “the Wheel”; this handbook treats them separately.
Where to go next
Section titled “Where to go next”- Options terminology: Strike, premium, expiration, and the rest of the vocabulary these pages use.
- Investing: The prerequisite section, if you are still weighing whether to hold individual stocks.