Covered Call Calculator
Own 100 shares and sell a call against them to earn income. See your premium, break-even, returns if the price stays the same or your shares are called away, and profit or loss up to expiry.
Stock
What you paid for the shares. Leave blank to use today's price.
Call you're selling
Calendar days to expiry: 35
Manual settings
Left blank, it's worked out from your premium.
Has only a small effect. Leave at 4% if unsure.
Example trade shown. Replace with your own numbers.
Profit / loss by stock price
Profit / loss over time
Values before expiry are estimates using Black-Scholes and the implied volatility above. Assumes you hold the shares and the call to each date shown, and ignores closing fees, dividends and early assignment. For educational purposes only.
What is a Covered Call?
A covered call is a way to earn extra income from shares you already own. For every 100 shares, you sell one call option. The buyer pays you a premium straight away, and in return you agree to sell your shares at the strike price if the stock is above it at expiry.
If the stock stays below the strike, the call expires worthless. You keep the premium and your shares, and you can sell another call. If the stock finishes above the strike, your shares are usually "called away": you sell them at the strike price and keep the premium too.
How to use this calculator
1. Enter the stock's current price. Adding the ticker symbol is optional.
2. Enter what you paid per share. Leave it blank if you want to use today's price.
3. Enter the strike price of the call you're selling, and the premium per share you'll receive.
4. Set the expiry date, or type the number of days to expiry.
5. Enter how many contracts you're selling (one per 100 shares) and any fees per contract.
The calculator updates as you type. You'll see:
- The premium you collect, your maximum profit if the shares are called away, and your break-even price.
- Your return if the stock price stays the same, annualised, and your return if the shares are called away.
- Your chance of making a profit and your chance of the shares being called away.
- A chart of your profit or loss at different stock prices, today, at two dates in between, and at expiry. Hover over the chart (or tap it on a phone) to read exact values.
- A table of profit or loss by stock price and date, shown in dollars or as a percentage of what your shares cost.
You can find the premium in your broker's option chain. Use the mid-price between the bid and the ask for a realistic figure. Under "Manual settings" you can enter the implied volatility yourself, change the interest rate, or set the price range shown in the chart and table.
When is a Covered Call a good choice?
- You own shares and expect them to stay flat or rise slowly.
- You'd be happy to sell your shares at the strike price. Choose a strike you'd be pleased to sell at.
- You want regular income from shares you plan to hold, and you're comfortable capping your upside for a while.
- Implied volatility is higher than usual. Premiums are richer, so you're paid more for the same strike.
- You're running the wheel strategy: after being assigned shares from a cash secured put, you sell covered calls on them.
When might it not suit?
- You expect a big rise in the stock. Your profit stops at the strike price, so you'd miss the rest of the gain.
- You don't want to sell the shares, for example for tax reasons or because they're a long-term holding.
- You expect a sharp fall. The premium only cushions a small drop, and you still carry the risk of owning the shares.
Things to keep in mind
- Your maximum profit is the gain up to the strike price plus the premium. Above the strike, extra gains go to the call buyer.
- Your break-even is what you paid per share minus the premium. Below that, you're losing money overall.
- Your shares can be called away before expiry, especially just before an ex-dividend date if the call is in the money.
- If the stock rises past your strike and you want to keep the shares, you can often buy back the call and sell a new one further out (a "roll").
This calculator gives estimates for educational purposes only. It isn't financial advice. Option prices before expiry are modelled, and real prices will differ.