A few days ago I decided to do an income trade. I purchased 100 shares on Royal Bank (RY) at a cost of 61.26 excluding commissions. I then wrote a covered call with a Jun 21/13 62 call option for an option premium of 69.05 after commissions. This amount gets immediately into my broker account. Using a covered call allows an person to increase there rate of return.
If the price of Royal Bank stock goes above $62.00 the option might be "called away". That means I am obligated to sell my shares at $62.00, which is the strike price. If the option expires worthless, I will then decide to sell or sell with a covered call.