Free calculator
Covered call calculator
See the premium income, yield, breakeven and capped upside of a covered call before you sell the strike.
Inputs
Result
- Premium income
- $220.00
- Premium yield
- 2.14%
- Annualized premium yield
- 29.32%
- Breakeven
- $89.80
- Max profit (if called)
- $1,520.00
- Max return if called
- 16.52%
- Downside protection
- 2.39%
- Upside given up above strike
- $200.00
- Max loss (stock to zero)
- -$8,980.00
Payoff and scenarios
| Move | Underlying | P/L |
|---|---|---|
| -20% | $82.40 | -$740.00 |
| -10% | $92.70 | $290.00 |
| -5% | $97.85 | $805.00 |
| spot | $103.00 | $1,320.00 |
| +5% | $108.15 | $1,520.00 |
| +10% | $113.30 | $1,520.00 |
| +20% | $123.60 | $1,520.00 |
Above $105.00 the shares are called away and the position stops participating in further gains. Below $89.80 the position loses money despite the premium collected.
Assumptions and limits
- One short call per 100 shares held.
- Held to expiration; early assignment and dividends are not modelled.
- Results are pre-fee and pre-slippage.
What the calculator measures
Premium yield is the income divided by the current share value. Breakeven is your cost basis minus the premium, which is how much the shares can fall before the position loses money.
Maximum profit is the capped stock gain to the strike plus the premium. Above the strike the shares are called away and the position stops participating in gains.
The upside trade-off
A covered call converts part of your upside into income. It is suited to shares you are willing to sell at the strike, not to positions where you expect a sharp rally.
FAQ
- What is the maximum profit?
- Strike minus cost basis plus premium, per 100 shares.
- What is the breakeven?
- Cost basis minus premium per share.
- Can a covered call lose money?
- Yes, if the shares fall more than the premium collected.