Covered call margin benefit

Wed, 20 May 2026 00:00:00 +0000

A covered call (long stock + short call on the same underlying) earns the margin benefit because the underlying stock provides the delivery commitment for the short call. The strategy is popular for generating additional income on long-term equity holdings.

Structure

Covered call = Long stock + Short call (same underlying).

Example:

Hold 100 RELIANCE shares (long).
Sell 1 RELIANCE 2950 CE (short call).

If RELIANCE rises above 2950 by expiry:

Covered Call on WebNotes

Covered call margin benefit

Structure