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Covered Call Calculator

Covered Call Calculator
Trade Inputs
$
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×100 shares

Expiration Results

Exact trade-level results at expiration, before commissions, taxes, dividends, and financing costs.

Premium Income
$300.00
Max Profit
$1,300.00
Breakeven
$97.00
Max Loss
-$9,700.00
Stock Cost
$10,000.00
Downside Protection
3.00%
Return If Called
13.00%
Annualized If Called
158.17%

1 standard contract represents 100 shares. Annualized return uses simple annualization and does not imply the trade can be repeated at the same return.

Advanced Pre-Expiration Scenario

These assumptions change the payoff chart, not the expiration results above. Day 0 is the entry date; the expiration day shows the terminal payoff.

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IV does not affect the payoff at expiration

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Total Profit/Loss at Expiration

The chart shows total position profit and loss across possible stock prices, with the stock-only position as a reference.

A covered call combines a long stock position with a short call option sold against that stock. Enter your stock cost, call strike, premium, expiration, and number of contracts to calculate total premium income, maximum profit, breakeven, downside protection, and return if the shares are called away. If you are still learning the trade, read the covered call strategy guide first.

Option premiums are entered on a per-share basis, which matches how listed options are quoted. The calculator converts those quotes into trade-level results using 100 shares per standard U.S. equity option contract. The model does not include commissions, bid-ask spreads, taxes, dividends, or early assignment rules.

What the Calculator Does

The covered call calculator estimates the combined profit and loss from two linked positions:

  1. A long stock position, using the stock entry price as the reference cost basis.
  2. A short call option, using the strike price, premium, expiration, and contract count.

The result cards use the exact expiration formulas and remain separate from the scenario chart. By default, the chart also shows the expiration payoff. Open the advanced scenario controls to estimate a pre-expiration mark-to-market value, where the short call still has time value and implied volatility can affect the result.

This distinction matters. A covered call has a clean expiration payoff, but before expiration the option may gain or lose value even if the stock has not moved through the strike.

Inputs

How to Read the Results

The expiration results first show total premium income, stock cost, maximum profit, maximum loss, breakeven, downside protection, return if called, and the simple annualized return if called. Dollar results reflect the selected number of contracts.

The chart shows the position’s total profit and loss across a range of possible stock prices. Green areas are profitable outcomes, red areas are losing outcomes, and the gray reference line shows what the stock-only position would do from the same entry price and share count.

The vertical strike marker shows where the short call begins to have intrinsic value. The breakeven marker shows the stock price where the premium exactly offsets the stock loss. If you select a time before expiration under the advanced controls, the chart becomes a model estimate rather than a fixed expiration payoff.

Losses are shown as negative values. For example, a maximum loss of $97 per share appears as -$9,700 for one standard contract.

Covered Call Formulas

At expiration, ignoring commissions, taxes, dividends, and financing costs, the covered call’s per-share profit and loss is:

ST−S0+P−max(0,ST−K)S_T - S_0 + P - max(0, S_T - K)

Where:

The key expiration values are:

MetricFormulaMeaning
Capped upsideK−S0+PK - S_0 + PThe best per-share outcome once the stock is at or above the strike. When positive, this is the maximum profit shown by the calculator.
Breakeven priceS0−PS_0 - PThe stock price where the premium offsets the stock loss.
Maximum loss amountS0−PS_0 - PThe per-share loss if the stock falls to zero.

For NN standard contracts, multiply per-share dollar results by 100N100N. The calculator defines return if called as:

K−S0+PS0\frac{K - S_0 + P}{S_0}

The displayed annualized return uses simple annualization:

Return if called×365Days to expiration\text{Return if called} \times \frac{365}{\text{Days to expiration}}

Annualization is a comparison tool, not a forecast that the same trade can be repeated throughout the year.

The capped upside formula can be small or even negative if the strike is below your stock entry price and the premium does not offset selling below cost. That is not a calculator error. It means the trade has capped the stock position at an unattractive exit price.

Example

Suppose you own stock at $100 per share. You sell a 30-day call with a $110 strike and collect a $3.00 premium per share.

At expiration:

Here are three possible expiration outcomes:

Stock Price at ExpirationShort Call OutcomeCovered Call Result per Share
$90Expires worthless-$7
$102Expires worthless$5
$120Stock is sold at the $110 strike$13

The last row shows the central tradeoff. The stock rose to $120, but the covered call keeps only $13 per share because gains above the $110 strike are given up in exchange for the $3 premium.

Expiration Payoff vs. Pre-Expiration Value

If Days Since Entry is set equal to the expiration days, the calculator uses the option’s intrinsic value. In that case, implied volatility no longer changes the final payoff because the option has no time value left.

If Days Since Entry is earlier than expiration, the chart estimates what the position may be worth before the option expires. That estimate depends on the remaining time, implied volatility, and interest-rate input. Treat the pre-expiration line as a scenario model, not as a live broker quote.

What the Calculator Does Not Include

Frequently Asked Questions

Is this calculator per share or per contract?

Enter the option premium per share, just as it appears in an option quote. The calculator then uses the number of contracts to display total dollar results. One standard equity option contract represents 100 shares.

Why is covered call profit capped?

The short call gives someone else the right to buy your shares at the strike price. Once the stock rises above that strike, additional stock gains are offset by losses on the short call. You keep the premium, but you give up upside above the strike.

Does the calculator include dividends?

No. Dividends are not included. That matters because dividends can affect option value and early assignment risk. A covered call on a dividend-paying stock may behave differently around the ex-dividend date.

Why does the chart change before expiration?

Before expiration, the short call may still have time value. Its value can change with stock price, time remaining, implied volatility, and interest rates. That is why a pre-expiration snapshot does not always match the simple expiration formulas.

What happens if the stock finishes above the strike?

At expiration, the short call is in the money. In a standard covered call, your broker will usually assign the call and sell your shares at the strike price, subject to broker procedures and exercise thresholds. You keep the original premium and the stock gain up to the strike.