The investment strategy of selling covered calls has been used successfully by investors since 1973. For each 100 shares of stock an investor owns he can sell 1 call option. The reason to do this is to collect option premium today in exchange for putting a cap on your upside. No matter what happens you will never receive more than the strike price per share for your stock. However, you can set the strike price as high as you like (but if you set it too high then you won’t get much premium for the option).
If you own stocks or ETFs and you are not selling call options against them each month then you are leaving money on the table. It turns out that lots of people do it. In fact, Charles Schwab has stated that 84% of their option enabled account holders trade covered calls. Probably because they are more conservative than buy-and-hold.
