Covered calls let you generate income from stocks you already own by selling call options against them. You keep the premium immediately regardless of outcome. This calculator shows your max profit, break-even price, what happens if shares get assigned, and the annualized income yield.
Trade Details
Key Metrics
Scenario: Call Expires Worthless
Stock stays below strike at expiration — you keep shares AND premium.
Scenario: Shares Get Assigned
Stock rises above strike — shares sold at strike price.
How to Use the Covered Call Options Calculator
Covered calls are one of the most popular options strategies for generating income from existing stock positions. This calculator shows you exactly what you stand to earn under both possible outcomes — expiration and assignment.
Step 1: Enter Your Stock Details
Enter the current stock price and your cost basis (what you paid per share). The cost basis determines your actual profit/loss if assigned, accounting for your original entry price rather than just today's price.
Step 2: Enter the Call Option Details
Enter the strike price you are selling, the premium you will receive per share, and the number of shares (one standard options contract covers 100 shares). Enter the days to expiration (DTE) to calculate the annualized yield.
Step 3: Review Both Scenarios
The calculator shows two scenarios: (1) the call expires worthless, meaning you keep the premium and your shares — your profit is just the premium received; (2) the call is assigned, meaning your shares are sold at the strike price — your maximum profit is the gain on shares plus premium. The annualized yield standardizes the premium income to a per-year rate so you can compare across expirations.
Choosing the Right Strike Price
Out-of-the-money (OTM) calls (strike above current price) pay lower premiums but have lower assignment risk, letting you participate in more upside. At-the-money (ATM) calls pay higher premiums but risk assignment if the stock barely moves. The optimal choice depends on your income goals versus your willingness to part with shares at a given price.
FAQ
Is this covered call calculator free?
Yes, completely free with no signup required. All calculations run in your browser.
Is my data private?
Absolutely. Everything runs client-side in your browser. No data is transmitted or stored.
What is a covered call?
A covered call is an options strategy where you own shares of a stock and sell (write) a call option against those shares. You receive the premium immediately. If the stock price stays below the strike price at expiration, you keep the premium and retain your shares. If the stock rises above the strike, your shares get 'called away' (sold at the strike price), capping your upside but still generating profit.
What is the maximum profit on a covered call?
Maximum profit is capped at: (Strike Price - Stock Purchase Price) + Premium Received. For example, if you own shares at $50, sell a $55 call for a $2 premium, your max profit is ($55 - $50) + $2 = $7 per share (if assigned) or just $2 per share if the call expires worthless and you keep the shares.
What is the annualized yield from a covered call?
Annualized yield = (Premium Received / Stock Price) × (365 / Days to Expiration). This standardizes the return to a per-year basis so you can compare across different expiration periods. A $1 premium on a $50 stock with 30 days to expiration = ($1/$50) × (365/30) = 24.3% annualized yield.
What is the break-even price on a covered call?
The break-even is your stock purchase price minus the premium received. If you bought stock at $50 and received a $2 premium, your break-even is $48. The premium provides a small downside buffer. Below $48, you are in a loss position despite the premium income.