Covered call calculator
See the breakeven, returns and downside protection of a covered call.
Runs 100% in your browser- Breakeven
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- Max profit (if called)
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- If-called return
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- Static return
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- Annualised (if called)
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- Downside protection
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How to calculate covered call returns
- Enter your shares. Type your cost basis per share and how many shares (multiples of 100).
- Enter the call you sold. Add the strike, the premium received and days to expiration.
- Read the returns. See breakeven, if-called and static returns, annualised yield and downside protection.
What a covered call trades away
A covered call is shares you already own plus one short call sold against every 100 of them. The premium is yours to keep no matter what, which turns a passive holding into an income position — but in exchange you cap your upside at the strike. If the stock rockets past the strike, you still only sell at the strike; the gains above it belong to the call buyer. So the trade quietly swaps unlimited upside for a fixed, paid-in-advance return. It suits shares you are neutral-to-mildly-bullish on and would be content to sell at the strike anyway.
The numbers this tool returns
Breakeven is your cost basis minus the premium received — the premium lowers your effective entry, which is the calculator's "downside protection" figure (premium ÷ basis). If called profit is the gain when the stock is above the strike at expiry: (strike − basis + premium) per share. The static return is what you earn from premium alone if the stock simply sits still and the call expires worthless (premium ÷ basis). The annualised figure scales the called return by 365 ÷ days so you can compare a 30-day call against a 45-day one on equal footing — though it assumes you can keep repeating the trade, which real markets rarely let you do at the same rate.
The risk that stays with you
The premium cushions a small decline, but only by its own size — below breakeven you carry the full loss of the stock, exactly as if you held it outright. A covered call is not a hedge; it is a partial, one-time discount on your entry. It pairs naturally with the wheel strategy (sell puts to acquire shares, then sell calls against them), and you can check the call leg in isolation with the options profit calculator.
Educational tool only — not financial advice. You retain full downside risk in the stock below breakeven. Options trading carries a high level of risk.
Frequently asked questions
- A covered call is owning 100 shares of a stock and selling one call option against them. You collect the premium; in exchange you cap your upside at the strike, because the shares can be "called away" if the stock finishes above it.
- Breakeven is your cost basis minus the premium received. The premium also cushions losses — downside protection is the premium as a percentage of your cost basis.
- The if-called return assumes the stock finishes above the strike and your shares are sold at the strike. The static return assumes the stock is unchanged and you simply keep the premium. Annualised scales the if-called return to a yearly rate.
- You still own the stock, so you bear its full downside below your breakeven, while your gains are capped at the strike. A covered call trades upside for income.
- No — it all runs in your browser.