Covered call calculator
Premium, breakeven, max profit, and annualized return, with the actual math
A covered call sells a call option against 100 shares of stock you already own. You collect the premium up front, and in exchange you agree to sell your shares at the strike if the stock rises above it. It is the most common way long-term holders turn a stock position into income.
Worked example, priced with the same Black-Scholes engine the calculator runs: you own 100 shares bought at $100 and sell the $105 call, 30 days out, at 45% implied volatility.
The premium lowers your breakeven to $96.73, so you profit unless the stock falls more than 3.3%. The cost is your upside above $105: if the stock rockets to $120, you still sell at $105. The 41.2% annualized figure is the static return scaled to a year — a way to compare trades, not a promise, since you cannot count on repeating the same premium every cycle and assignment ends the position.
Open the covered-call calculator → Loaded in Income mode with this exact trade. Change the strike, expiry, or your stock cost and watch the return update.How to read it
The projection board shows the full position's profit and loss (your shares plus the short call) at every future date and stock price, and the panel shows premium, breakeven, max profit, and both the static and annualized return. Enter the implied volatility from your broker's option chain for a realistic premium.
Frequently asked questions
What is a covered call?
Selling one call option against 100 shares of stock you own. You collect the premium now and agree to sell the shares at the strike if the stock finishes above it at expiry. It generates income and lowers your breakeven, at the cost of capping your upside above the strike.
What are the max profit and max loss?
Max profit is the gain to the strike plus the premium: in the example, ($105 - $100) + $3.27 = $8.27 per share if the stock is called away. The loss side is the same as owning the stock, minus the premium cushion; your breakeven drops to $96.73.
What does the annualized return mean?
It scales the static return (premium divided by capital at risk) to a full year by multiplying by 365 over the days to expiry. It assumes you could repeat the trade at the same premium every cycle, which you cannot rely on, so treat it as a comparison tool, not a forecast.
What happens if the stock is above the strike at expiry?
You are assigned: your 100 shares are sold at the strike price. You keep the premium and the gain up to the strike, but you miss any move above it. If you want to keep the shares, you can buy the call back or roll it before expiry.