Covered call
Selling a call against an asset already held in the portfolio.
How to read the number
The premium is received at once, and in exchange the seller gives away everything above the strike: the return becomes capped.
When the metric lies
The structure removes none of the downside. On a fall the premium covers a small part of the loss, on a rise the shares are called away, leaving the worse half of both outcomes.
Also known as: buy-write