Covered call funds have become popular in recent years as investors look for higher yielding investment strategies to add to their portfolios. A covered call option strategy involves investing in a portfolio of stocks and then selling call options on the same stocks that are held in the portfolio. This strategy allows a fund to generate additional income from the premiums received when selling call options, which reduces the volatility of the portfolio and allows the fund to pay out higher distributions than it would otherwise be able to do.