I'm looking at covered call strategy, say for a stock index. Advocates for covered call strategy would say that you can generate income by selling a call and provide some cushion on the downside. But when I compare the total return (including dividends) of, say S&P 500 index and the corresponding buywrite index, the long-term annualized return of S&P 500 is about 7-8%, while that of the buywrite index is about 4-5%. The long-term return of a buywrite strategy actually does not outperform simply buy & hold of the underlying index. Also, if the long-term annualized return of the buywrite index is just 4-5%, the income we can genuinely expect to generate per year should not be more than 4-5%. Many high dividend stocks or high yield bonds actually pay more than that. Can someone shed some light about why covered call strategy makes sense?