Covered Call Calculator
Calculate max profit, breakeven, and premium yield for covered call strategies. Essential for options income trading.
Educational use only. Not financial advice. Results are estimates. Trading involves risk. Read full disclaimer.
Covered calls are a popular income-generating strategy where you own shares and sell call options against them. This calculator helps you analyze the potential returns, breakeven points, and risks of covered call positions. Understanding these metrics is crucial for managing covered call strategies effectively and maximizing income while managing assignment risk.
Covered Call Calculator
Results
Max Profit (if assigned)
$650.00
Max Profit %
13.00%
Breakeven (downside)
$48.50
Premium Yield
2.88%
Note: If the stock price stays below the strike, you keep the premium and your shares. If assigned, your shares will be sold at the strike price, and you keep the premium.
Estimates only.
How to Use This Calculator
- Enter number of shares: How many shares you own (typically 100 per contract, but can be more).
- Enter stock cost basis: The price per share you paid for the stock.
- Enter current stock price: The current market price of the stock.
- Enter call strike price: The strike price of the call option you're selling.
- Enter premium received: The premium per share you received for selling the call (multiply by 100 for total per contract).
- Review results: See max profit, max profit %, breakeven, and premium yield.
Formula
Max Profit = (Strike - Cost Basis + Premium) × Shares
Max Profit % = (Max Profit ÷ Total Cost Basis) × 100
Breakeven = Cost Basis - Premium
Premium Yield = (Premium ÷ Current Stock Price) × 100
Common Mistakes to Avoid
- Ignoring assignment risk: If the stock rallies above the strike, you'll be assigned and lose your shares. Don't sell calls on stocks you don't want to sell.
- Chasing high premium: Very high premiums often indicate high volatility or the stock is already in-the-money, increasing assignment risk. Balance premium with your outlook.
- Not considering taxes: Covered calls can affect your holding period for long-term capital gains. Consult a tax advisor if you're trading covered calls regularly.
- Selling calls on stocks you want to keep: Only use covered calls on stocks you're willing to sell at the strike price. If you're bullish, consider not selling calls or using out-of-the-money strikes.