# skill-covered-calls — checklist

Review before education output. This list does not approve a trade.

## When to use
- [ ] Shares of a liquid underlying are already held.
- [ ] The goal is call premium with upside capped at the short strike.

## Setup
- [ ] Covered means one short call per 100 shares already owned. No share inventory, no covered call.
- [ ] Typical illustration: out-of-the-money calls about 3–10% above spot, weekly or bi-weekly expiry.
- [ ] State spot, strike distance, expiry, and contracts before premium.

## Rules of thumb
- [ ] Do not suggest a naked call.
- [ ] State the assignment path and the roll or close criteria before expiry.
- [ ] State the downside if the shares fall: premium collected does not remove share risk.
- [ ] Breakeven on the shares moves down by the premium received, and upside above the strike is given up.

## Pitfalls
- [ ] Selling through an event or a level the holder wanted to keep.
- [ ] Early assignment into a rally, then no shares left for the move.
- [ ] Calling the position covered when the share count is short of 100 per contract.

## Disclaimer
- [ ] Disclosure is present: risks, the options disclosure document, and omitted costs.
- [ ] The answer is education. It is not a signal, a recommendation, or an order.