Covered call vs cash-secured put: which is better?

    Short answer

    A covered call sells a call against 100 shares you already own; a cash-secured put sells a put while holding enough cash to buy 100 shares. Both collect premium and carry similar risk — a large drop in the stock — so the choice mostly depends on whether you already own shares.

    Side by side

    • Covered call: own the stock, cap your upside at the strike, keep the premium.
    • Cash-secured put: no stock yet, may buy shares at the strike, keep the premium.
    • Both lose money if the stock falls sharply; the premium only cushions the loss.
    • Used together in a cycle, this is often called "the wheel".

    Choosing strikes (examples, not advice)

    • Covered call: a strike above recent resistance or the call wall.
    • Cash-secured put: a strike at a price where you would be happy to own the stock.
    • Avoid holding either through earnings unless you accept a large gap.

    Common questions

    Which is safer?

    Their risk profiles are nearly identical. A cash-secured put can be slightly simpler because you choose your entry price in advance.

    What happens if my covered call is assigned?

    Your shares are sold at the strike price. You keep the premium plus any gain up to the strike, but miss gains above it.

    Go deeper with Rebel Intel

    Build a covered call plan for AAPLWhich strike would you pick for a cash-secured put on AMD?Explain the wheel strategy step by step

    Related

    Educational only, not investment advice. Options involve risk and are not suitable for all investors. See how Intel is reviewed.