Covered Call Calculator
Selling a call against shares you own pays you a premium today in exchange for a ceiling on your upside. Enter your stock cost, the strike and the premium to see your max profit, static return, return-if-called and annualized yield — with a payoff chart marking exactly where that ceiling kicks in.
One contract covers 100 shares you already own. You sell the call and collect the premium up front. If the stock closes above the strike at expiration, your shares are called away (sold) at the strike.
Covered call outcome
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How to use the calculator
- Enter the price you paid for the stock and the strike of the call you're selling.
- Enter the premium received per share and the number of contracts (each covers 100 shares you own).
- Optionally add days to expiration to see the return-if-called expressed as an annualized yield.
- Read your max profit, static return, return-if-called, breakeven and net cost basis — and see the capped-upside zone on the chart.
Selling upside for premium
A covered call is one of the most widely used income strategies in options: you own at least 100 shares and sell a call option against them. In return for the premium, you agree to sell your shares at the strike price if the stock rises above it by expiration. The premium is yours to keep no matter what — it lowers your cost basis and cushions small declines — but it also caps your upside at the strike.
The strike you pick sets that trade-off. An out-of-the-money strike keeps more upside but pays less premium; an in-the-money strike pays more premium and cushions the downside more, but almost guarantees your shares get called away. The two returns to compare are the static return(income if the stock goes nowhere) and the return-if-called (your total return if you're assigned). Annualizing the return-if-called lets you compare a 30-day call against a 45-day call on an apples-to-apples basis. Covered calls generate income on shares you already want to own — they are not a hedge against a large drop, so size and strike selection matter.
Frequently asked questions
How is covered call return calculated?
There are two returns to watch. Static return is the premium divided by your stock cost — what you earn if the stock finishes unchanged and below the strike. Return-if-called is (strike − purchase + premium) ÷ purchase — your total return if the stock is above the strike at expiration and your shares are sold (called away). This calculator shows both, plus the annualized figure when you enter days to expiration.
What is the difference between an in-the-money and out-of-the-money covered call?
An out-of-the-money call has a strike above the current stock price: you collect less premium but keep some upside if the stock rises to the strike. An in-the-money call has a strike below the stock price: you collect more premium (and more downside cushion) but give up any upside and are more likely to be called away. Try both presets to see how the numbers change.
What is the maximum profit on a covered call?
Max profit happens when the stock closes at or above the strike at expiration. It equals (strike − purchase price + premium) × number of shares. Above the strike your gain is capped — the shares are sold at the strike no matter how high the stock goes, so you keep the premium plus the gain up to the strike and nothing more.
What is the breakeven and downside risk of a covered call?
Breakeven is your purchase price minus the premium received. The premium cushions losses down to that point, but below it you lose money just as you would holding the stock outright. A covered call reduces cost basis and generates income — it does not protect against a large decline, so it works best on shares you are comfortable owning.
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Educational tool only — not financial advice. Options involve substantial risk and are not suitable for all investors. Also see our trading blog.