A covered call is an options strategy where a trader sells, or writes, one call option for every 100 shares of stock they own. This means that if the stock price rises above the strike price of the written call option, the trader will have to sell their stock at the strike price, while also collecting the premium from writing the call option. The covered calls strategy is a conservative approach as it limits potential losses and provides additional income through the premiums received from selling the options. However, this strategy also has limited upside potential for the trader since they are obligated to sell their stock if the price rises above the strike price of the written call option.