Strategy

Covered Call Quiz

By Dennis Bosmans · Updated June 2026 · 2 min read · Risk disclaimer

The covered call is the most popular income strategy. These six questions check that you know what you give up and what can go wrong.

Pick an answer for each question — your score appears at the end.

1. Question 1A covered call combines long stock with…

   A long callA short callA long putA short put

   You own the shares and sell (write) a call against them.

2. Question 2The main goal of a covered call is to…

   Get unlimited upsideGenerate income from premiumHedge all downsideDouble leverage

   You collect premium for agreeing to sell your shares at the strike.

3. Question 3A covered call caps your upside at…

   UnlimitedThe strike priceThe break-evenZero

   Above the strike your shares get called away, so gains stop there.

4. Question 4If the stock stays below the strike at expiration, the call…

   Is assignedExpires worthless and you keep the premiumMust be bought back at a lossConverts to a put

   It expires worthless, you keep the premium and still own the stock.

5. Question 5The biggest risk of a covered call is…

   The call expiringA large drop in the stockRising interest ratesDividends

   The premium only cushions a small drop; a big decline still hurts.

6. Question 6Covered calls work best when you expect the stock to be…

   Sharply bullishNeutral to slightly bullishSharply bearishExtremely volatile

   Flat-to-mildly-up lets the call expire while you keep the premium.

Educational use only. Quotes are delayed ~15 minutes and nothing here is financial advice. Options trading involves substantial risk of loss. Privacy Policy · Terms & Conditions.