Gavin McMasterThu, Jul 3, 2025, 12:00 PM 3 min readIn This Article:Holding money bunched in fist by Iana Miroshnichenko via iStockCovered calls are a great strategy to add to any portfolio, and can offer enhanced yield from stock holdings, in some case, that can be a significant increase.To trade a covered call we need to own (or buy) 100 shares of a stock and then sell a call option against that stock position.GE Aerospace Bear Put Spread Could Return 208% in the Next Few MonthsHuge Unusual Volume in Pfizer Put Options Signals Investors Bullish OutlookIBIT Covered Calls: 2 Smart Strategies for Crypto-Linked IncomeTired of missing midday reversals? The FREE Barchart Brief newsletter keeps you in the know. Sign up now!Invest in GoldThe goal is to generate income from the stock holding in addition to any dividends. The premium received from selling the call also covers a small decline in the stock price. However, the trade off is that stock gains are limited above the call option strike price.High volatility stocks have the highest return potential with covered calls, but they also have the highest risk of an adverse price movement. It’s all about finding a strategy that fits the investors risk tolerance.iShare Bitcoin ETF Trust (IBIT) is up 26.33% in the last three months and is currently showing implied volatility of 40.21%.Using options, we can generate a significant income from high volatility stocks via a covered call strategy.IBIT Covered Call ExampleLet’s look at two different covered call examples on IBIT stock. The first will use a monthly expiration and the second will use a five-month expiration.Let’s evaluate the first IBIT covered call example.Buying 100 shares of IBIT would cost around $6,240. The August 15, 65-strike call option was trading yesterday around $2.73, generating $273 in premium per contract for covered call sellers.Selling the call option generates an income of 4.6% in 44 days, equalling around 37.9% annualized. That assumes the stock stays exactly where it is. What if the stock rises above the strike price of 65?If IBIT closes above 65 on the expiration date, the shares will be called away at 65, leaving the trader with a total profit of $531 (gain on the shares plus the $273 option premium received). That equates to an 8.9% return, which is 73.8% on an annualized basis.A screen shot of a graph AI-generated content may be incorrect.Instead of the August call, let’s look at selling the December 65-strike call instead.Selling the December 65-strike call option for $7.25 generates an income of 13.1% in 170 days, equalling around 28.2% annualized.If IBIT closes above 65 on the expiration date, the shares will be called away at 65, leaving the trader with a total profit of $983 (gain on the shares plus the $725 option premium received).Terms and Privacy PolicyPrivacy & Cookie SettingsMore InfoS&P 5006,279.35 +51.93 (+0.83%)Dow 3044,828.53 +344.11 (+0.77%)Nasdaq20,601.10 +207.97 (+1.02%)Russell 20002,249.04 +22.66 (+1.02%)VIX17.48 +1.10 (+6.72%)Gold3,346.50 +3.60 (+0.11%)PortfolioSign in to access your portfolioSign inTop gainersBMNR Bitmine Immersion Technologies, Inc. 135.00 +76.50 (+130.77%)RUN Sunrun Inc. 10.50 +1.51 (+16.80%)TRIP Tripadvisor, Inc. 17.50 +2.51 (+16.74%)DDOG Datadog, Inc. 155.15 +20.14 (+14.92%)SYM Symbotic Inc. 47.91 +5.71 (+13.53%)Top losersLEN Lennar Corporation 110.12 -4.69 (-4.09%)LEN-B Lennar Corporation 105.62 -4.37 (-3.97%)ESGRP Enstar Group Limited 19.45 -0.79 (-3.91%)HOOD Robinhood Markets, Inc. 94.40 -3.58 (-3.65%)BG Bunge Global SA 78.44 -2.95 (-3.62%)Most activeLCID Lucid Group, Inc. 2.1600 +0.1100 (+5.37%)NVDA NVIDIA Corporation 159.34 +2.09 (+1.33%)INTC Intel Corporation 22.49 +0.61 (+2.79%)F Ford Motor Company 11.81 +0.04 (+0.34%)TSLA Tesla, Inc. 315.35 -0.30 (-0.10%)Earnings eventsTrending tickersBTC-USD Bitcoin USD 107,753.06 -2,196.42 (-2.00%)NDM.TO Northern Dynasty Minerals Ltd. 2.4000 +0.4800 (+25.00%)HR-UN.TO H&R Real Estate Investment Trust 12.46 +1.83 (+17.22%)TD.TO The Toronto-Dominion Bank 101.69 +0.10 (+0.10%)^GSPTSE S&P/TSX Composite index 27,036.16 +1.90 (+0.01%)Top economic eventsPowered by Money.com - Yahoo may earn commission from the links above.