Use Case
Generate Portfolio Income
Turn 100 shares into income while creating a cushion against the first part of a decline.
A covered call pays you option premium for agreeing to sell your shares at a chosen price if the stock rises above it. That premium - together with expected dividends - also offsets part of a decline through expiration.
Choose how much income to generate - and how much upside to keep.
More income + bigger cushion
More upside
Lower sale price
Higher sale price
Example: income and protection from 100 shares over the next 30 days
Illustrative flow for one 100-share covered call held through expiration.
100 shares
Sell 1 call
Option premium
Expected dividends
Total income
Downside cushion
If total income equals 4% of the stock value, approximately the first 4% of decline is economically offset by that income through expiration.
After the income cushion is exhausted, additional stock losses remain.
The upside tradeoff
Higher income
Lower sale price
Larger downside cushion
Less upside retained
Lower income
Higher sale price
Smaller downside cushion
More upside retained
See how concentrated your portfolio is.
After connecting your brokerage we'll automatically identify:
- Concentrated positions
- Cash sitting idle
- Diversification gaps
- Holdings eligible for outcome modeling
Connect your portfolio in under 60 seconds and see how much of your portfolio depends on your largest holdings.
Analysis only. No trades are created or submitted. Illustrative and educational; Parity does not provide investment or tax advice.