Covered Call vs Premium

A yield-enhancement strategy combining a long spot position with a sold call option on the same asset; the short call is covered by the underlying position, eliminating naked short risk; generates premium income at the cost of capping upside at the strike price.

The upfront price paid by the option buyer to the option seller for the rights conveyed by the contract; the premium is the buyer's maximum possible loss if the option expires worthless; composed of intrinsic value and extrinsic (time) value.