What is a common outcome for an investor who uses a covered call strategy?

Using a covered call strategy typically involves an investor holding a long position in a stock while simultaneously selling call options on that same stock. This strategy allows the investor to generate additional income from the premiums received for the call options.

When the call options are sold, the investor collects premium income upfront, which can provide a cushion against potential loss from the stock or enhance overall returns if the stock price remains stagnant or increases only moderately. If the stock price rises above the strike price of the call option, the investor may have to sell the stock at that price, but they still benefit from the premium received in addition to any gains from the stock’s price appreciation, up to the strike price.

This strategy is particularly appealing in a sideways or slightly bullish market, as it allows investors to gain income while still holding onto the underlying asset. However, it's important to note that while the income from premiums can be significant, it does not eliminate the risks associated with stock ownership, such as price declines.

In contrast, the other options suggest outcomes that do not align with the reality of a covered call strategy. For instance, while there is potential for profits, there are no guarantees, and the risks inherent in the stock market remain.