Covered Call Calculator
What a covered call actually pays — the premium if the stock sits still, the total if it is called away, both annualised, and how far it can fall before the trade turns against you. Works on shares you already own as well as a fresh buy-write.
Covered call calculator, explained
What is the difference between static return and if-called return?
They are the two outcomes a covered call has, and confusing them is the usual way the trade gets oversold. Static return is what you make if the stock finishes exactly where it is today and the call expires worthless: (min(spot, strike) − basis + premium) ÷ capital. For a buy-write that is simply the premium over what you paid. If-called return is what you make when the shares are assigned at the strike: (strike − basis + premium) ÷ capital. If-called is the larger of the two whenever the strike is above your basis, because it adds the move up to the strike on top of the premium — so quoting it as though it were the income case overstates what the position does most of the time.
Is downside protection measured against my cost basis or today’s price?
Against today’s price, and the page shows two separate cushions because they answer different questions. Downside protection is the premium alone as a share of the current price — premium ÷ spot — which is what the call you just sold buys you. The break-even cushion is how far the stock can fall from here before the whole position is at a loss: (spot − break-even) ÷ spot, where break-even is basis − premium. For a buy-write the two are identical. If you are writing against shares bought much lower they are not, and rolling an unrealised gain into a “97% protected” headline is exactly the sort of number that flatters a trade — so they stay apart.
Why does it stop annualising a one-week write?
Because the number stops meaning anything. Annualisation here is simple, not compounded — return × 365 ÷ days — and a two-day write paying 0.4% comes out at 73% a year, which is arithmetically true and useless: nobody writes the same contract 182 times in a row at the same price. Under seven days the figure is withheld rather than printed next to a real monthly one, which is the same rule the per-ticker covered-call pages follow.
What if the call is already in the money?
Then assignment is the base case, not the upside, and the calculator says so. “The stock does not move” means the shares get called away at the strike, so the static figure collapses onto the if-called figure instead of pretending you keep both the premium and a share worth more than the strike. Writing an in-the-money call is a legitimate way to exit a holding with a little extra — see moneyness — but it is a sale with a sweetener, not income.
Can a covered call lose money?
Yes, in two distinct ways, and both are surfaced. The stock can fall: your worst case is (premium − basis) × shares, which is nearly the whole position, because the premium is a thin cushion against a share that can go to zero. And the strike can be too low: if strike + premium is below your cost basis, being assigned realises a loss, and the page flags it rather than printing a cheerful max profit. In that case the break-even sits above the strike, where the payoff is already flat, so there is no reachable break-even at all — the calculator reports “none” instead of a price the stock could never rescue you at.
Where do I get real strikes and premiums to put in?
The placeholders exist to put the right shape on screen, not to price anything — replace them. The covered-call page for a ticker already prices every out-of-the-money strike at the nearest income expiry from the settled chain, and the full option chain has the rest. If you want the structure drawn against other legs — a collar, say, or a wheel leg — the options profit calculator takes arbitrary legs, and the covered-call guide walks through strike selection.
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Educational, not investment advice. These are standard models applied to the numbers you enter — they describe what the maths implies, not what the market will do.