Covered Call Calculator
A covered call sells someone the right to buy your shares at the strike price in exchange for a premium. This calculator shows your income, protection, and the P&L curve at expiration.
One contract covers 100 shares.
Maximum Profit
$375.00
if assigned at the strike
Breakeven
$48.75
stock price at expiry
Downside Protection
2.50%
Annualized Return
30.4%
premium yield if repeated
Profit / Loss at Expiration
Assumptions & limitations
- Premiums are quoted per share; one contract covers 100 shares.
- P&L is at expiration only — early assignment, dividends, commissions, slippage, and taxes are not modeled.
- Annualized return assumes you can repeat this premium every cycle, which is not guaranteed.
Covered call payoff
Max Profit = (Strike − Price + Premium) × Shares Breakeven = Price − PremiumAbove the strike your shares are called away, capping gains. The premium cushions losses below your purchase price. Annualized return = (Premium / Price) × (365 / Days).
How It Works
- 1You collect the premium immediately, keeping it no matter what happens.
- 2If the stock finishes above the strike, your shares are sold ("assigned") at the strike — that’s the max-profit scenario.
- 3If it finishes below, you keep the shares and the premium, reducing your effective cost basis.
Frequently Asked Questions
What’s the biggest risk of covered calls?
Opportunity cost — if the stock rockets past your strike, you miss the upside. Your downside remains full stock ownership risk minus the premium.
Which strike should I pick?
Higher (further OTM) strikes = more upside, less income. Closer strikes = more income, more assignment risk. Many income sellers target ~30-delta strikes.
What happens at assignment?
Your 100 shares per contract are sold at the strike automatically. You keep the premium plus any appreciation up to the strike.
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