A simple strategy: the covered call

A covered call is a conservative options strategy. It works like this:

• You already own at least 100 shares of Nike.
• You sell one call option, agreeing to sell your shares at a higher price by a certain date.
• In return, you receive cash today, known as the option premium.

If Nike doesn’t go above that higher price, you keep your shares—and the cash. If it does rise, your shares may be sold at that higher price, and you still keep the premium.

One possible setup

Let’s walk through an example using real numbers from today:

• You own 100 shares of Nike at $74.73.
• You sell a call option with a strike price of $83, expiring on 3 October 2025.
• You receive about $1.19 per share, or $119 in total.

This means you agree to sell your Nike shares for $83 if the stock rises above that level before 3 October. If it stays below $83, nothing happens—you keep the shares and the $119.

Let’s say Nike climbs to $83 or higher. Your shares may be sold, and you make a total gain of almost $946—this includes the rise in share price and the $119 option premium.

If the stock drops below $74.73, the premium helps reduce your loss. Your breakeven price in this example is around $73.54.

Why choose the $83 strike?

The $83 strike price gives you more than 11% potential upside from the current share price. This means you’re not giving up gains too early. At the same time, the option still pays you a solid premium thanks to the upcoming earnings announcement.

This balance—keeping some upside and earning income—is why many investors choose slightly higher strike prices.

What are the risks?

While this is considered a safe strategy, there are still a few things to keep in mind:

• If Nike’s stock rises sharply after earnings, your profit is limited to $83 per share.
• If the stock drops significantly, the option premium won’t cover all your losses.
• There is a small chance your shares could be sold early, but that’s unlikely since the dividend date has already passed.

What to do as the stock moves

If Nike moves close to $83 before earnings, you might consider adjusting the trade—perhaps by choosing a later expiry or a higher strike price.

If the stock stays flat, the option will lose value over time. You can keep the full premium and decide later whether to repeat the strategy after earnings.

After the earnings report, the option premium usually drops. This is called a “volatility crush.” At that point, you can sell a new option or just hold your shares.

Who should consider this?

This strategy may be a good fit if you:

• Own at least 100 Nike shares
• Don’t plan to sell soon
• Would be happy to sell at a higher price
• Want to earn extra income in the meantime

You don’t need to be a trader. You don’t need to time the market. This is a simple, practical way to get more out of a stock you already own.