A covered call is one of the most straightforward, income-generating strategies you can use—especially in retirement. If you already own stock, this is a way to get paid just for holding it.
How It Works:
Own 100 shares of a stock you’re comfortable keeping.
Sell 1 call option for that stock—usually 30 days out and slightly above the current price.
Collect the premium as instant income.
Outcome A: If the stock stays below the strike, you keep the shares and the premium.
Outcome B: If it rises above the strike, your shares may be sold at that price—but you still keep the premium and lock in a gain.
Example:
You own 100 shares of Coca-Cola (KO) at $60 per share.
You sell one call option with a $62.50 strike price expiring in 30 days.
You collect $1.00 per share ($100 total) in premium.
Scenario A: KO stays below $62.50
You keep your 100 shares plus the $100 income.
Scenario B: KO rises above $62.50
Your shares get sold at $62.50
You make $2.50 per share in stock gains and keep the $100 premium
Either way—you’re getting paid.
Why It Works for Retirees:
It turns your stock into a monthly income stream
It adds a buffer against small losses
It’s simple, repeatable, and doesn’t require market timing
Ready to Try It?
You don’t need to become a Wall Street pro—just someone with a plan.
At OptionsAction.com, we walk you through covered call strategies step-by-step, with plain-English explanations and real examples like this one.
Learn more about covered calls
Have questions? Let us know—we’re here to make trading feel doable, not daunting.
