What Happens If Stock Goes Up After Selling Covered Call?

When stock rises after selling a covered call, here's what happens:

Scenario 1: Stock Rises But Stays Below Strike

Stock goes from $100 to $105, your strike is $110

Option expires worthless ✅

You keep shares ✅

You keep premium ✅

Best case scenario!

Scenario 2: Stock Rises Above Strike

Stock goes from $100 to $120, your strike is $110

What happens:

You're assigned (or will be at expiration)

You sell shares at $110

You keep the premium

You miss gains above $110

Example:

Sold $110 call for $3

Stock at $120 at expiration

You sell at $110 + $3 premium = $113 effective

You missed: $120 - $113 = $7 per share

Your Options When Stock Rallies

1. Let It Get Assigned

Take your profit

Move on to next trade

Not a loss—you made money!

2. Roll Up and Out

Buy back current call

Sell new call at higher strike, farther out

Try to do for a credit

3. Buy to Close

Close the call

Keep your shares

Accept the loss on the option

Is This a "Loss"?

No! You still made money:

Capital gains to strike price

Plus premium collected

You just made less than you could have. That's the trade-off with covered calls.