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Covered Call Calculator

Return if flat, if called, annualized, and break-even.

PrivateFreeSourcedReviewed

Not financial advice. All results are estimates based on the prices you enter. This tool does not use real-time market data: check live quotes with your broker before you trade.

Annualized return if the stock stays flat

OTM call

21.9%

1.80% in 30 days on $10,000 of stock · compounded 24.2%
Premium collected
$180

$1.80 × 100 shares

Return if called
6.80%

82.7% annualized

Break-even price
$98.20

1.80% downside cushion

You collect $180 now. If the stock stays below $105.00, you keep the shares and earn 1.80% in 30 days, 21.9% annualized. If it's called away, you earn 6.80% ($680). You only lose money below $98.20.

Try a what-if

Profit at expirationA covered call trades upside above the strike for cash now. Profit is capped at the strike and the premium cushions losses down to the break-even.
$74$89$104$131-$3K-$2K-$850$0$850todaystrikebreak-even

What happens at expiration

Down 10% ($90.00)
−$820
Down 5% ($95.00)
−$320
Flat ($100.00)
$180
At the strike ($105.00)
$680
Up 10% ($110.00)
$680

Not financial advice. Money Scale is not a broker, investment adviser or tax professional, and nothing here is a recommendation to buy or sell any security or option. These calculators are for education.

Estimates only. Every figure is a hypothetical estimate built from the numbers you type in. Results ignore taxes, bid-ask spreads, early assignment, margin requirements and anything else you don't enter. Annualized returns assume a trade could be repeated all year, which is not guaranteed. Past or hypothetical results don't predict future returns.

No real-time market data. These tools don't pull live stock or option prices. Quotes change constantly, so confirm current prices, premiums and fees with your broker.

Options involve risk and aren't suitable for every investor: a covered call or cash-secured put can still lose most of the stock's value. Read the OCC's Characteristics and Risks of Standardized Options before trading options.

Your numbers

What you pay for the shares, or what they're worth now if you already own them.

$100.00

$105.00 strike

The bid you'd get for the call. Brokers quote it per share; one contract = 100 shares.

$1.80 / share

30 days

Contracts, dividends & fees1 contract · $0.00 dividend · $0.00 fee

1 contract (100 shares)

Only if an ex-dividend date falls before expiration and you expect to keep the shares through it.

$0.00

$0.00

Next steps

A covered call calculator shows what you earn by selling a call option against 100 shares you own. Enter the stock price, strike, premium and days to expiration, and it returns four numbers option sellers care about: your return if the stock stays flat, your return if the shares are called away, both annualized, and your break-even price. It also charts profit at expiration across a range of stock prices, so you can see exactly where the strike caps your upside and where the premium stops cushioning a drop.

How this calculator works

  1. Enter the stock price: what you'd pay for the shares today, or what they're worth now if you already own them.
  2. Enter the call's strike price and the premium per share (use the bid, which is what you'd actually receive).
  3. Set the days to expiration. 30–45 days is common; weekly calls (7 days) annualize higher but need more management.
  4. Open 'Contracts, dividends & fees' to add more contracts, a dividend you'll collect before expiration, or your broker's commission.
  5. Read the headline: annualized return if the stock stays flat (or if called, for an in-the-money call). Check the break-even and the scenario table before you trade.

return if flat = (premium + dividend) ÷ stock price return if called = (strike − stock price + premium + dividend) ÷ stock price annualized = return × 365 ÷ days break-even = stock price − premium − dividend

All figures are per share, and one contract covers 100 shares. Commissions come off the premium before dividing. The simple annualized rate is the convention option sellers quote; the compounded rate, (1 + return)^(365 ÷ days) − 1, is shown beside it and assumes you could repeat the same trade back to back all year.

premium
Call premium received per share
strike
The price your shares sell at if the call is assigned
days
Calendar days until the option expires
dividend
Dividends per share you'll collect before expiration (0 if none)

Frequently asked questions

How do you calculate the return on a covered call?

Divide the premium (plus any dividend) by the stock price. That's your return if the stock finishes below the strike. If the shares are called away, add the gain up to the strike: (strike − stock price + premium) ÷ stock price. Example: $100 stock, $105 strike, $1.80 premium = 1.8% if flat and 6.8% if called.

How do you annualize a covered call return?

Multiply the return by 365 and divide by the days to expiration. A 1.8% return over 30 days is 1.8% × 365 ÷ 30 = 21.9% annualized. That assumes you could repeat the same trade all year, which the market rarely allows, so treat it as a way to compare trades, not a forecast.

What is the break-even price on a covered call?

Stock price minus the premium per share (and minus any dividend you collect). Buy at $100 and sell a call for $1.80, and you don't lose money at expiration unless the stock closes below $98.20.

What happens if my covered call is assigned?

Your shares are sold at the strike price and you keep the premium. Your profit is the strike minus what you paid for the shares, plus the premium. Assignment usually happens at expiration, but an in-the-money call can be exercised early, most often the day before an ex-dividend date.

Is a higher premium always better?

No. A bigger premium comes from a strike closer to the stock price (less upside before you're capped), a longer expiration (more time at risk), or a more volatile stock (bigger swings either way). Compare annualized returns and how much upside you give up, not the dollar premium alone.

Sources used in this calculator

Reviewed by the Money Scale editorial team. How we source our data

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