How to Sell Covered Calls: The Complete 2026 Guide

What Is a Covered Call?

A covered call is an options strategy where you own 100 shares of a stock (or ETF) and sell someone else the right to buy those shares at a specific price (the strike price) by a specific date (expiration).

In exchange for selling that right, you collect a premium — cash that's yours to keep regardless of what happens.

**Example:** You own 100 shares of ASTS at $85. You sell one covered call with a $100 strike expiring in 30 days for $3.00. You collect $300 immediately. Three outcomes:

1. ASTS stays below $100 → call expires worthless, you keep $300

2. ASTS rises above $100 → shares get called away at $100 (you profit $15/share + keep the $300 premium)

3. ASTS drops → you lose on the shares but still keep the $300 premium, reducing your loss

Strike Selection: The Core Decision

At or Above Your Cost Basis Only. Never sell a covered call with a strike below your average cost. That locks in a loss.

The 30-Delta Rule: Selling the ~30-delta strike (option that's ~30% likely to be exercised) is the standard income-generating approach. It's far enough out-of-the-money to reduce assignment risk while still collecting meaningful premium.

30-45 DTE (Days to Expiration): The sweet spot for time decay. Options lose value fastest in their last 30 days — sell at 30-45 DTE and close at 50% profit or at 21 DTE, whichever comes first.

Best Brokers for Covered Calls

The best platforms for selling covered calls are Tastytrade (free-to-close pricing + best P&L analytics), Webull (zero commissions), and thinkorswim/Schwab (most powerful analytics). See our [best options brokers guide](/best/best-options-brokers.html) for a full comparison.