Covered calls are a popular options trading strategy that involves selling call options on an underlying asset that you already own. This strategy is also known as a "buy-write" strategy.

Here's a summary of the covered call strategy:

*Benefits:*

- Generates additional income from the premiums received

- Can help offset the cost of owning the underlying asset

- Can be used to lock in profits if you're already holding the underlying asset

*Risks:*

- Caps your potential upside if the price of the underlying asset rises significantly

- May require you to sell the underlying asset at a lower price than its market value

- Limited potential profit (premium received + strike price)

*Example:*

- Buy 100 shares of XYZ stock at $50

- Sell a call option on XYZ stock with a strike price of $55

- Receive a premium of $2 per share

If the price of XYZ stock remains below $55 at expiration, the option will expire worthless, and you get to keep the premium. If the price rises above $55, the buyer will exercise the option, and you will have to sell the stock at $55, capping your potential upside.

Remember, it's essential to understand the risks and rewards of covered calls and to adjust the strategy according to your investment goals and market conditions.