# How do Covered Calls work?

A covered call is a simple and powerful tool at your disposal. 

* You own a crypto asset like HYPE or WBTC
* You sell a call option: the right (although, not an obligation) for someone else to buy your asset at a chosen price (strike) in the future.
* For selling that right, you earn an upfront premium (yield), regardless of the option being exercised or not.
* If the asset stays below the strike price, you keep both the premium and your asset
* If the price rises above the strike price, your asset is sold at the strike price but you still keep the premium as extra profit.<br>

***

#### Example: Selling a Covered Call with a $100 Strike Price

| Scenario            | Price at Expiry | What Happens         | What You Earn  |
| ------------------- | --------------- | -------------------- | -------------- |
| Below Strike price  | $95             | Keep asset + premium | Premium        |
| At the strike price | $100            | Keep asset + premium | Premium        |
| Above strike price  | $110            | Asset sold at $100   | Premium + $100 |

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