A covered call involves selling a call option on a stock the investor already owns. The strategy generates income in the form of the premium collected for selling the call, providing additional returns on the stock position.
* D is correctbecause the primary goal of a covered call is to generate income.
* Ais incorrect because covered calls do not hedge against large declines in the stock price.
* Bis incorrect because speculation involves taking higher risks, not a covered call's conservative strategy.
* Cis incorrect because no strategy guarantees a profit.