Covered Call Calculator
Calculate the profit potential, breakeven price, and return on a covered call strategy. Enter your stock price, strike, and premium to see max profit, max loss, and return scenarios at expiration.
Enter your stock price, strike price, and premium, then click Calculate to see your covered call profit potential, breakeven, and return scenarios.
For educational purposes only. Not financial advice. Read full disclaimer
Related Tools
Options Profit Calculator
Calculate P/L for calls and puts at expiration
Black-Scholes Calculator
Find theoretical option prices for your calls
Options Greeks Calculator
Understand delta, theta, and vega for your call
Want the full context? See the full trade planning workflow →
Covered Call Formulas
Premium Collected = Premium per Share × 100 × Contracts
Net Debit = (Stock Price × 100 × Contracts) − Premium Collected
Max Profit = ((Strike − Stock Price) × 100 × Contracts) + Premium Collected
Max Loss = Net Debit (if stock goes to $0)
Breakeven = Stock Price − Premium per Share
Return if Assigned = Max Profit / Net Debit × 100
Return if Expires = Premium Collected / (Stock Price × 100 × Contracts) × 100
Worked Examples
Example 1: AAPL Covered Call (OTM)
You buy 100 shares of AAPL at $150 and sell 1 call at the $160 strike for a premium of $3.00 per share.
- Premium Collected = $3.00 × 100 = $300
- Net Debit = ($150 × 100) − $300 = $14,700
- Max Profit = (($160 − $150) × 100) + $300 = $1,300
- Max Loss = $14,700 (if AAPL goes to $0)
- Breakeven = $150 − $3.00 = $147.00
- Return if Assigned = $1,300 / $14,700 = 8.84%
- Return if Expires = $300 / $15,000 = 2.00%
Example 2: SPY Covered Call (ATM)
You buy 200 shares of SPY at $450 (2 contracts) and sell 2 calls at the $450 strike for a premium of $8.00 per share.
- Premium Collected = $8.00 × 100 × 2 = $1,600
- Net Debit = ($450 × 100 × 2) − $1,600 = $88,400
- Max Profit = (($450 − $450) × 100 × 2) + $1,600 = $1,600 (premium only, since ATM)
- Breakeven = $450 − $8.00 = $442.00
- Return if Assigned = $1,600 / $88,400 = 1.81%
- Return if Expires = $1,600 / $90,000 = 1.78%
How to Use This Calculator
- Enter the stock purchase price — the price at which you buy (or already own) the underlying shares.
- Enter the call strike price — the strike of the call option you plan to sell. This must be at or above the stock price for an ATM or OTM covered call.
- Enter the premium received — the per-share price you receive for selling the call option.
- Enter the number of contracts — each contract covers 100 shares. Make sure you own enough shares to cover.
- Click Calculate — review your max profit, max loss, breakeven price, and return scenarios to decide if the trade fits your outlook.
Frequently Asked Questions
- What is a covered call?
- A covered call is an options strategy where you own 100 shares of a stock and sell (write) one call option against those shares. You collect premium upfront in exchange for agreeing to sell your shares at the strike price if the option is exercised. It is one of the most common income-generating strategies for stock holders.
- When should I use a covered call?
- Covered calls work best in neutral-to-slightly-bullish markets. If you expect the stock to stay flat or rise modestly, selling calls lets you earn income from the premium while you wait. Avoid covered calls if you expect a large upside move, since your profit is capped at the strike price.
- What happens if the stock drops below my breakeven?
- If the stock falls below your breakeven (stock price minus premium received), you have a net loss on the position. The premium you collected reduces your effective cost basis, but it does not eliminate downside risk. You still own the shares and bear the full loss if the stock declines significantly.
- What is the difference between return if assigned and return if expires?
- Return if assigned is your total percentage return when the stock is called away at the strike price — it includes both the capital gain on the shares and the premium collected. Return if expires is the percentage return from the premium alone, assuming the call expires worthless and you keep your shares.
- Can I lose money on a covered call?
- Yes. Your maximum loss equals the net debit (cost of shares minus premium received), which occurs if the stock falls to zero. The premium you collect provides a small cushion, but the risk profile is very similar to owning the stock outright. Covered calls reduce risk slightly but do not eliminate it.