Covered Call Calculator

How the covered call calculator works

A covered call means you own 100 shares of a stock and sell one call option against them. The buyer pays you a premium up front. In return, you agree to sell your shares at the strike price if the stock is above it at expiration. You keep the premium either way.

This calculator does two jobs. "Find calls" pulls the option chain for any US ticker and lists the calls that match your filters: days to expiry, how far out of the money, and a minimum annualized yield. "Enter my own numbers" lets you type the stock price, strike and premium yourself. That's useful for a quote from your broker or a ticker we can't load.

The formulas

• Premium yield = premium ÷ stock price. This is the income you collect on the money tied up in the shares.
• Annualized yield = premium yield × 365 ÷ days to expiry. This lets you compare a 7-day call with a 45-day call on equal terms. It assumes you could repeat the same trade all year, which real markets rarely allow.
• Return if called away = (strike − stock price + premium) ÷ stock price. This is the premium plus any gain up to the strike.
• Max profit = (strike − stock price + premium) × shares. A covered call caps your upside at the strike.
• Break-even = stock price − premium. Below this price at expiration, the trade loses money.
• Downside cushion = premium ÷ stock price. This is how far the stock can fall before you're below break-even.

More detail on each metric is on our metrics definitions page.

A worked example (example numbers)

Say a stock trades at $50 and you sell the 30-day $52 call for $1.00 a share on 100 shares.

• Premium collected: $100. Premium yield: 2.0%. Annualized: about 24.3%.
• If the stock is above $52 at expiration, your shares are called away at $52. You make $200 on the shares plus the $100 premium, for $300, a 6.0% return (about 73% annualized).
• If the stock is flat at $50, the call expires worthless. You keep the $100 and the shares.
• If the stock drops 10% to $45, the shares lose $500 and the premium offsets $100, for a net loss of $400 (−8.0%).
• Break-even is $49.00, so the cushion is 2.0%.

Choosing a strike and expiration

Strikes closer to the stock price pay more premium but are more likely to be called away. Strikes further out of the money pay less but leave more room for the stock to rise. Shorter expirations often show higher annualized yields, but you have to place a new trade more often. An unusually high yield usually means the market expects big price swings, so higher yield often comes with more risk to the shares.

What happens at expiration

There are three common outcomes. The call can expire worthless, and you keep the premium and the shares. It can be assigned, and your shares are sold at the strike. Or you can roll it before expiration, buying back the current call and selling a later or higher one, often for a net credit. Each choice changes your real return. That's hard to track once you've rolled a few times.

Track the real return after you trade

The calculator shows one trade before you place it. CoveredLoop tracks what actually happens afterward: rolls, assignments, premium kept, and your return on capital across every position. You can try it on a free sample portfolio first.

Track your covered calls in CoveredLoop

How CoveredLoop tracks covered calls