Generate Additional Income from Meta Shares Using a Covered Call

Summary

Meta Platforms has pushed further into consumer artificial intelligence with the introduction of AI Muse and a premium subscription model for advanced AI capabilities. For existing shareholders, the question is not only whether those initiatives can support future growth, but also at what price they would be willing to sell part of a holding if the shares continue to rise.

Writing covered calls against part of a position allows an investor to define a future sale price on chosen shares while leaving the remainder of the holding untouched.

Meta shares closed at approximately USD 740.70, with investors balancing enthusiasm around the company's expanding AI ecosystem against continued scrutiny of AI-related spending. The recently announced AI Muse platform and subscription offering represent another attempt to monetise Meta's large user base beyond traditional advertising revenue.

For shareholders who already own Meta stock, a covered call introduces a practical question rather than a forecast: would selling some shares at USD 830 within the next month be acceptable in exchange for receiving option premium income today? Options carry a high risk of rapid loss and are not suitable for every investor.

Covering part of the position

Selling a covered call means selling another market participant the right to buy shares already owned at a predetermined price, known as the strike price, until a specified expiry date.

In return, the investor receives an upfront premium and keeps that premium regardless of the eventual outcome. The trade-off is straightforward: gains above the strike price on the covered shares are given up in exchange for immediate income.

One option contract covers 100 shares, though an investor does not need to cover an entire position.

Meta share price chart with the USD 830 strike highlighted. Illustrative and educational only. Not predictive. Past performance is not indicative of future results.

Example structure (illustrative only - not a trade recommendation)

• Holding: 500 Meta shares, worth approximately USD 370,350
• Sell 2 META calls
• Strike: USD 830
• Expiry: 23 October 2026
• Premium: USD 12.30 bid per share (USD 1,230 per contract)
• Total premium received: USD 2,460 (USD 1,230 X 2 - for two contracts)
• Premium represents roughly 1.48% of the value of the 200 shares covered for the period
• If assigned, the effective sale price becomes approximately USD 842.30 per share before costs and charges

The strike sits around 12% above the current share price. In practice, the investor is being paid today in exchange for agreeing to sell covered shares at a level Meta has not yet reached.

Strategy insight: coverage is a dial, not a switch

One of the most overlooked aspects of covered calls is position sizing.

Covering 20% or 40% of a holding communicates something different from covering the entire position. Partial coverage allows an investor to retain substantial upside exposure while generating some income from shares they would be willing to sell at a higher price.

Covering all shares generates more premium but also caps more upside.

Importantly, neither approach changes the downside risk of owning the stock.

What this looks like in practice (hypothetical and educational only)

• If META remains below USD 830 at expiry, the option expires worthless and the investor keeps both the premium and the shares.
• If META rises above USD 830 at expiry, the covered shares may be sold at USD 830, while any uncovered shares continue participating fully in the rally.

Which expiry?

The selected contract expires on 23 October 2026, before Meta's earnings announcement tentatively scheduled for 28/29 October 2026.

That timing matters because earnings announcements frequently increase uncertainty and implied volatility in options markets. By selecting the October expiry, an investor avoids carrying a short call position through the earnings event itself.

The trade-off is that shorter-dated contracts generally receive less premium than contracts extending beyond earnings.

In practical terms, the investor is choosing between:

• Collecting a smaller premium while avoiding the earnings event.
• Collecting a larger premium while accepting the additional uncertainty earnings can introduce.

If the premise is wrong

For an investor who believes Meta's AI initiatives, including AI Muse and premium subscriptions, could drive a significantly stronger re-rating in the shares, selling upside at USD 830 may conflict with that view.

Conversely, if an investor is concerned that expectations surrounding AI monetisation have become excessive, a covered call offers only limited protection because the premium collected offsets only a fraction of any decline in the share price.

The strategy tends to sit between those two extremes. It may appeal most to shareholders who are comfortable continuing to own Meta but would also be willing to sell part of the position at a higher price.