ThetaTrend

I think one of the biggest advantages of trading options is that they give you the flexibility and ability to create complex positions that would not be possible if you only traded the underlying. Even a short vertical spread gives you some pretty cool things: it can make money if price moves, doesn't move, or only moves against you a little bit. You can also construct positions that move in your favor more as they move in your favor and go against you less as they go against you. Both seem pretty desirable.

It seems like covered calls are most advantageous to trade in two situations: one is when price is fairly depressed and volatility is high and the second is when the underlying is in a moderate uptrend. In both cases you should want to own the underlying. In the first case, the premium you receive should be fairly rich and increase the yield of your underlying position up to your maximum profit. Note that the equivalent short put position or vertical spread might require less capital and result in a higher yield. The second case where price is in a moderate uptrend and doesn't reach your short strike before expiration, but doesn't collapse or it does collapse and you have a predetermined exit point. All that being said, I'm with ntrader and prefer to trade vertical spreads.