A trader who owns 100 shares of stock may sell (or write) a Covered Call. The trader receives a credit for selling the Call and is obligated to sell those 100 shares at the strike price of the Call. One goal of Covered Calls is to capitalize on downward fluctuations in the share price of a stock you own 100 shares of. Selling Naked calls, or writing calls, without Shares as collateral can have a very high risk of ruin due to the hypothetically infinite upside of call contracts. With Covered Calls, if the trade goes against you, instead of covering and having to buy the contract(s) back, you’ll more likely lose your shares to cover those contracts.