Covered calls — selling premium on stock you own

You own 100 SPY at $500. You SELL ONE weekly SPY 510 Call for $2.00 premium.

• Cash in hand: +$200 (collected)
• If SPY stays below $510 by Friday: the option expires worthless. You keep the $200 AND your 100 SPY shares.
• If SPY goes to $515: the option assigns. You sell your 100 SPY at $510 (the strike). You keep the $200 premium + get $510 × 100 = $51,000 for the shares.
• Total if assigned: $51,200 vs. $51,500 if you'd just held. You "capped" your upside at strike + premium.

• You're mildly bullish / neutral on the underlying
• You're OK with selling your shares at the strike (it's a GOOD price)
• You want to generate yield on a position that would otherwise sit flat

• You're very bullish (call gets assigned, you miss upside)
• The stock is volatile down (premium doesn't cushion a big crash)
• Low premium for the risk

• Without covered call: breakeven at cost basis (say $500)
• With covered call: breakeven at cost basis − premium received ($500 − $2 = $498). Slight downside cushion.

Compute the P&L under three scenarios.