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Collect monthly income from UBS – a beginner’s guide to covered calls
Koen Hoorelbeke
Investment and Options Strategist
Collect monthly income from UBS – a beginner’s guide to covered calls
UBS has been in the spotlight recently after reporting a Q2-25 net profit of about USD 2.4 billion, more than double the result from a year earlier. The bank continues to benefit from the successful integration of Credit Suisse and strong performance in its wealth management division. With the share price trading near CHF 30–31 and just below its five-year high of CHF 32.9, long-term shareholders may be wondering how they can make their shares work harder without taking on additional risk.
One straightforward way to do this is by selling a covered call – a conservative options strategy that can generate extra income while you continue holding your UBS shares.
What is a covered call?
Think of a covered call as renting out your shares. If you own at least 100 UBS shares, you can sell a call option on those same shares. In return, you collect cash – called the premium – up front.
At expiry, one of two things happens:
- If UBS stays below the agreed price (strike), you simply keep your shares and the premium.
- If UBS goes above the strike, your shares may be sold at that price, and you keep the premium on top of any gains up to the strike.
It’s a conservative approach because you already own the shares – you are not taking on extra risk beyond potentially selling your shares at the strike price.
Important note: The strategies and examples described are purely for educational purposes. They assist in shaping your thought process and should not be replicated or implemented without careful consideration. Every investor must conduct their own due diligence, considering their financial situation, risk tolerance, and investment objectives before making decisions. Remember, investing in the stock market carries risks, so make informed decisions.
An example trade today
| Building-block | Detail |
|---|---|
| Underlying | UBS Group AG (UBSG:xvtx) |
| Position assumed | 100 shares at CHF 30.78 = CHF 3 078* |
| Call to sell | 15 August 2025 expiry – CHF 31.50 strike |
| Premium (bid) | ~CHF 0.20 per share = CHF 20 cash today |
| Income yield | CHF 20 ÷ CHF 3 078 ≈ 0.65 % in one month (about 7.8 % annualised) |
*Actual entry price will depend on the market price at the time of trade.
How to place this trade
- Check your eligibility. You must already own at least 100 UBSG shares in an options-enabled Saxo account.
- Open the option chain. Select “Calls” and choose the 15 August 2025 expiry.
- Pick the strike. Choose the CHF 31.50 call option.
- Place the order. Select Sell to Open, enter quantity 1, and a limit price of CHF 0.20.
- Collect premium. The CHF 20 premium is credited to your account, reducing your effective share cost to around CHF 30.58.
What could happen at expiry?
| Scenario | UBS closing price | Outcome |
| Below CHF 31.50 | Shares remain in your account | You keep your shares and the CHF 20 premium |
| Above CHF 31.50 | Shares are sold at CHF 31.50 | You realise gains from CHF 30.78 → 31.50 plus the CHF 20 premium |
You can always close or roll the position before expiry if market conditions change.
Benefits for long-term investors
- Earn while you wait. Generate extra income without selling your shares immediately.
- Small downside buffer. The premium collected cushions minor share price drops.
- Disciplined profit-taking. If UBS rallies above CHF 31.50, you lock in gains at a price slightly above today’s level.
Key risks to keep in mind
- Capped upside. If UBS surges beyond CHF 31.50, you miss out on further gains.
- Early assignment. Shares could be called away before expiry, especially near ex-dividend.
- Liquidity. Swiss-listed options are less liquid than US names; use limit orders.
- Costs and taxes. Don’t forget commissions and any local taxes on options trades.
What’s next?
Covered calls are just one way to make the most of shares you already own. In a follow-up article, we’ll explore how cash-secured puts can help you start a UBS position at a lower effective cost while also earning premium income.
| More from the author |
|---|
This material is marketing content and should not be regarded as investment advice. Trading financial instruments carries risks and historic performance is not a guarantee of future results.
The instrument(s) referenced in this content may be issued by a partner, from whom Saxo receives promotional fees, payment or retrocessions. While Saxo may receive compensation from these partnerships, all content is created with the aim of providing clients with valuable information and options..
The instrument(s) referenced in this content may be issued by a partner, from whom Saxo receives promotional fees, payment or retrocessions. While Saxo may receive compensation from these partnerships, all content is created with the aim of providing clients with valuable information and options..
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