A Covered Call is an options strategy that combines holding a long position in the underlying asset (or a perpetual equivalent) with selling a call option on that same asset.
It’s typically used by traders who expect the asset’s price to remain stable or rise moderately, and who want to earn additional income from their existing holdings.
How It Works
When you sell (or write) a call option, you agree to sell the asset at a specific strike price if the option buyer decides to exercise it.
By holding the underlying asset (or a long perpetual position), you’re “covered”, meaning you already own what you might need to deliver.
On Kyan, you can structure this trade by combining:
1× Long Perp or Spot-equivalent position
1× Short Call Option
Profit and Loss Profile
Maximum Profit: Limited to the option premium received plus any gains up to the strike price.
Maximum Loss: The same as holding the asset (if the price falls significantly).
Breakeven: Current asset price minus the option premium received.
Why Traders Use It
To generate yield on held assets.
To enhance returns in sideways or slightly bullish markets.
To reduce cost basis over time.