Covered Call
Covered Call Calculator for Beginners
Enter the numbers from your broker and see the premium, breakeven, maximum profit, and return in plain English. Free, no signup. Then drag the expiration slider to compare the covered call with simply holding your shares, measured from what you paid or from today's price.
Shows only what happens from here. Gains or losses you already had are left out.
- Premium
- $150.00
- Fees
- $0.00
- Net
- $150.00
At expiration
Pick where the stock might finish. Results are measured from today's price. The covered call and just holding use the same starting price and the same expiration date.
| Stock at expiry | Move | Covered call | Just holding | Difference |
|---|---|---|---|---|
| $40.00 | −20% | −$850.00 | −$1,000.00 | +$150.00 |
| $45.00 | −10% | −$350.00 | −$500.00 | +$150.00 |
| $50.00 | 0% | +$150.00 | $0.00 | +$150.00 |
| $55.00strike | +10% | +$650.00 | +$500.00 | +$150.00 |
| $60.00 | +20% | +$650.00 | +$1,000.00 | −$350.00 |
This table uses the intrinsic payoff at expiration. Actual exercise and assignment can differ (early assignment, expiration instructions), and it doesn't model the probability of assignment. How options assignment works
Example: you collected $150.00 in premium, but from today's price this position would be down $850.00 at $40.00.
Expiration payoff only. It isn't what the position is worth if you close early, and it isn't a forecast. Excludes dividends and taxes.
Estimates exclude taxes, dividends, brokerage costs you don't enter, and changes in option value before expiration. Educational use only.
In plain English
You already own 100 shares. You collect a premium today, but agree to sell those shares at the strike price if the option is assigned. The premium lowers your breakeven slightly, while the strike limits your upside.
Simple covered call example
100 shares bought at $45
Call strike: $50
Premium: $1.50 per share
Premium collected: $150
Breakeven: $43.50
Maximum profit from what you paid: $650 before fees and taxes
Formulas used
- Premium income = premium per share × 100 × contracts.
- Breakeven = share cost basis − premium per share.
- Maximum profit if assigned = (strike − baseline + premium) × 100 × contracts − fees, where the baseline is what you paid or today's price.
- Profit or loss at expiration = (lower of stock price and strike − baseline + premium) × 100 × contracts − fees.
- Annualized premium yield is a simple annualization, not a forecast of future results.
Beginner Questions
What do I need before selling a covered call?+
A standard covered call normally requires 100 shares for each call contract. You should also be comfortable selling those shares at the strike price if the option is assigned.
How do you calculate covered call profit?+
Maximum profit equals the share gain from your cost basis to the strike, plus the premium collected. If the stock stays below the strike, you normally keep the shares and the premium, but the shares can still lose value.
What is the breakeven on a covered call?+
Breakeven is your share cost basis minus the premium collected per share. The premium gives a small downside buffer but does not remove the risk of owning the stock.
What happens if the stock rises above the strike?+
Your shares may be called away at the strike price. You keep the premium and the share gain up to the strike, but you usually do not participate in gains above the strike.
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