Covered call

Selling covered call involves selling call option on an underlying stock that you already owned. It works best if the underlying stock does not make drastic price movements in the duration concerned (DTE - date to expiry of option).

While it can also be a strategy employed in volatile markets,  it may be worthwhile to note of the compounded risks if the strike price entered into for the call is lower than the purchase cost of stock.

For eg, you have been assigned (under a put option) to buy Meta at $128 during a fast changing market direction that sees the price drop to $88. To sell a covered call at strike price above $128 is fetching peanut premium (unless you go for long DTE). Considering you are holding Meta in your portfolio doing nothing, you may be tempted to sell call at say $100 to generate some income, with the intention of adjustment to the strike price by slowly rolling up (eg higher strike price at $130) and out (later expiry date) and continuing to roll till the strike price is the target price you are prepared to sell the stock. In the event that price direction has now reversed and is moving up 30% to 40% in a month and the target price is not reached, you may end up rolling the option at a loss. When the stock finally get sold away via assignment, the profit gained (selling price minus buy price) may be reduced by the option losses.

If covered call goes against you, you will close position with a loss and sell a new option with higher premium to cover the loss (aka rolling the option). You can continue rolling for as long as you like, but do consider the possibility that it may be better off to exit from this position instead.