Free calculator
Covered Call Calculator
Enter the stock price, strike, premium and days to expiry.
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Covered call calculator
Also your cost per share
Where you would sell
Calendar days, 1 to 1,825
100 shares each
- The term is 30 days, under 60. The annualised figure stretches a short period across a year, so use it only to compare contracts.
- Premium yield
- 1.75%
- Return if called
- 4.75%
- Monthly premium yield
- 1.75%
- Annualised premium yield
- 21.29%
Premium ÷ stock price, before any change in the share price
Premium plus the gain to the strike
Scaled to 30 days, as in the Matrix
Comparison scale only: assumes the same trade repeats for a year.
Premium yield 1.75%. Return if called 4.75%. Breakeven $98.25.
- Monthly yield, if calledThis calculator’s own figure, not the Matrix’s Monthly Yield %
- 4.75%
- Annualised, if calledAssumes the gain to the strike repeats each period
- 57.79%
- BreakevenStock price minus premium
- $98.25
- Downside protectionFall in the stock the premium absorbs
- 1.75%
- Strike vs stock price
- 3.00% above
- Premium received
- $175.00
- Profit if called awayThe most this position can make
- $475.00
- Loss if the stock goes to $0
- $9,825.00
Educational and informational only. Figures are simple calculations before commissions and taxes, and are not financial advice. Check the contract details with your broker.
How it is calculated
- Premium yield
premium ÷ stock priceThe premium as a share of the capital in the stock, before any change in the share price. It is the whole return only if the shares end where they started and are not called.
- Return if called
(strike − stock price + premium) ÷ stock priceThe premium plus the gain from the stock price up to the strike. This is the most the position can earn.
- Monthly premium yield
premium yield × 30 ÷ days to expiryScales any expiry to 30 days. It is the same figure as Monthly Yield % in the Matrix in Options Matrix Pro. The monthly figure for the return if called is this calculator’s own.
- Annualised return
period return × 365 ÷ days to expirySimple, not compounded. A comparison scale only.
- Breakeven
stock price − premiumThe price at expiry where the shares and the short call together break even.
- Downside protection
premium ÷ stock priceThe fall in the stock that the premium absorbs before the position loses money.
Assumptions
- One contract covers 100 shares, and the stock price you enter is also your cost per share.
- Premium yield counts the premium only and ignores any change in the share price.
- Returns are simple and shown before commissions, taxes and any dividends you receive.
- The return if called assumes assignment at the strike on the expiry date. An in-the-money call with little time value left can be assigned early, the day before an ex-dividend date for example.
- Annualised figures assume the same trade repeats every period for a year. Premiums change, so they are a comparison scale and not a forecast.
Worked example
You own 100 shares at $100.00 and sell one $103.00 call with 30 days to expiry for $1.75 a share. “Reset to example” loads these numbers into the calculator.
| Result | Working | Value |
|---|---|---|
| Premium received | $1.75 × 100 × 1 | $175.00 |
| Premium yield | $1.75 ÷ $100.00 | 1.75% |
| Annualised premium yield | $1.75 ÷ $100.00 × 365 ÷ 30 | 21.29% |
| Return if called | ($103.00 − $100.00 + $1.75) ÷ $100.00 | 4.75% |
| Annualised, if called | ($103.00 − $100.00 + $1.75) ÷ $100.00 × 365 ÷ 30 | 57.79% |
| Breakeven | $100.00 − $1.75 | $98.25 |
| Profit if called away | ($103.00 − $100.00 + $1.75) × 100 × 1 | $475.00 |
| Loss if the stock goes to $0 | ($100.00 − $1.75) × 100 × 1 | $9,825.00 |
Reading the result
Compare strikes on the return if called
A higher strike keeps more upside but pays a smaller premium. The return if called puts each strike on one scale: what you earn if the shares are sold at that strike.
An in-the-money call’s premium includes intrinsic value
When the strike is under the stock price, part of the premium is the gap between the two. The premium yield then overstates what you can earn: the most the position can make is the return if called, and the shares are likely to be called away.
Weigh what the strike gives up
The premium cushions a fall by its own size, and the strike caps the gain. A thin premium on a strike close to the price pays little for the upside you hand over.
Frequently asked questions
How do you calculate the return on a covered call?
Divide the premium by the stock price for the premium yield. For the return if called, add the gain from the stock price to the strike before dividing. With a $100.00 stock, a $103.00 strike and a $1.75 premium, the premium yield is 1.75% and the return if called is 4.75%. If the strike is below the stock price, part of the premium is intrinsic value and the return if called is the most the position can earn.
How do you find the breakeven of a covered call?
Subtract the premium from the stock price you entered, which is also your cost per share. At $100.00 with a $1.75 premium the breakeven is $98.25. Below that price at expiry the position loses money even after the premium.
Why is the annualised figure so much larger than the period return?
It multiplies the period return by 365 ÷ days. With 30 days that is about 12.17 times, so 1.75% becomes 21.29%. It assumes you can sell a call with the same premium every period. Premiums fall when volatility falls, and a call that finishes in the money ends the sequence because the shares are sold.
Does the calculator include dividends or fees?
No. It leaves out commissions, taxes and dividends so the figures stay comparable between contracts. Dividends paid while you hold the shares add to the return.
Go further
Compare every strike and expiry for a symbol
The Options Yield Matrix ranks one symbol’s contracts by Monthly Yield %, with probability of profit and position size beside each. It is included in Pro ($30/month) and All Access ($50/month).