A popular traditional market strategy, “covered calls” involve selling out-of-the-money (OTM) call options, or those with strike prices above the current market level, while owning the underlying asset. It is typically seen as a neutral to bullish strategy, because the upside is capped. A call option gives the holder the right but not the obligation to buy the underlying asset at a predetermined price on or before a specific date. A call option buyer is implicitly bullish, while the seller anticipates a price drop or consolidation and receives a premium for offering insurance to the purchaser.
