Covered Call Calculator
Options Income Calculator for Covered Call Positions
Calculate the premium income, annualized return, breakeven price, and assignment scenarios for selling covered calls against your stock holdings. A covered call involves owning at least 100 shares and selling a call option against them to collect premium income. It is one of the most common options income strategies used by investors with a neutral-to-slightly-bullish outlook.
You own 100 shares of AAPL at $150. You sell a $155 call for $3.50/share expiring in 30 days. You collect $349.35 in premium (after $0.65 commission). That is a 28.37% annualized return. If the stock rises above $155, your shares are called away for a total profit of $849.35.
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Frequently Asked Questions
Understanding covered calls and options income
What is a covered call?
A covered call is an options strategy where you sell a call option against shares you already own. You collect the premium as income in exchange for agreeing to sell your shares at the strike price if the option is exercised. It is called "covered" because your share ownership backs the obligation.
Covered calls are most effective when you have a neutral-to-slightly-bullish outlook on the stock. You keep the premium regardless of what happens, but you cap your upside at the strike price.
How is annualized return calculated?
The annualized return projects your covered call income over a full year. First, the static return is calculated as the premium divided by the stock price. Then, it is annualized by multiplying by (365 / days to expiration).
For example, a 2.33% return over 30 days annualizes to 28.37%. This does not mean you will earn 28% per year — it shows the equivalent annual rate if you could repeat the same trade continuously.
What happens if my covered call is assigned?
If the stock price is above the strike price at expiration, the option buyer will likely exercise the option. Your shares are "called away" — sold at the strike price. Your total profit is the premium received plus the difference between the strike price and your purchase price.
Assignment is not a loss. You keep all the premium income, and you sell the shares at a price you agreed to in advance. The only downside is missing further upside above the strike.
What is the breakeven on a covered call?
The breakeven price is the stock price minus the premium received. Below this price, your total position (shares + premium) starts losing money. The premium effectively lowers your cost basis on the shares.
For instance, if you buy at $150 and receive $3.50 in premium, your breakeven is $146.50. The stock can drop 2.33% before you are in a net loss position.
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For informational and educational purposes only — not investment advice.