A covered call means selling a call option against 100 shares you already own to collect premium income. This free calculator shows your static yield, your return if the stock gets called away, the annualized version of each, your breakeven price, how much downside the premium cushions, and the approximate odds of assignment. Type in a trade and every number updates instantly. Educational only, not advice.
How to use the covered call calculator
- Enter the current stock price and your cost basis (leave the basis equal to the price if you are buying today).
- Enter the strike price of the call you plan to sell and the premium per share.
- Set the contracts (each covers 100 shares), the days to expiration, and the option implied volatility.
- The big number is your annualized return if the shares get called away, and you also see the approximate probability of assignment.
The formula behind it
- Premium income = premium per share x 100 x contracts
- Static return = premium / cost basis
- If-called return = (strike minus cost basis plus premium) / cost basis
- Annualized = period return x 365 / days to expiration
- Breakeven = cost basis minus premium; downside protection = premium / price
- Prob. assigned is a lognormal estimate, roughly the chance the call finishes in the money
Covered call calculator FAQ
What is a good annualized return on a covered call?
Many income traders target roughly 12 to 36 percent annualized, depending on how much upside they cap and how volatile the stock is. Higher premium usually means higher risk.
What does prob. assigned mean?
It is a rough estimate of the odds your shares get called away, based on the implied volatility and time you enter. It is dividend-blind and ignores early exercise, so treat it as a guide.
Does this include commissions, taxes, or dividends?
No. It gives a clean before-costs view so you can compare trades on equal footing.
Educational only, not financial advice.