Covered call calculator.

A covered call trades some of your stock's upside for cash today. You own the shares, sell someone the right to buy them at the strike, and keep the premium whatever happens. The price of that premium is a cap on your profit and only a small cushion on the downside. This calculator puts the cap, the cushion and the worst case on one screen, using the textbook formulas for the position held to expiration.

How this is calculated

The Options Industry Council, the education arm of the Options Clearing Corporation, gives the covered call (buy/write) payoff at expiration for long stock and one short call. Maximum gain is strike price minus stock purchase price plus premium received. Maximum loss is stock purchase price minus premium received, which happens if the stock falls to zero. The page calls the downside size "limited but substantial". The breakeven stock price is therefore your purchase price minus the premium.

The tool multiplies per-share results by 100 shares per contract and subtracts the total fees you enter. Return if called is maximum profit divided by the cost of the shares. Return if not called assumes the stock finishes flat and you keep only the premium. Annualized figures scale the period return by 365 divided by the days you enter, which assumes you could repeat the trade at the same terms, so treat them as an illustration rather than a forecast. As of 2026-10-26, the formulas are those on the OIC covered call page.

Worked examples (hypothetical figures, real formulas)

You own 100 shares bought at $58 and sell one call with a $60 strike for $1.50 a share, collecting $150.00.

Called away. Maximum profit is ($60 - $58 + $1.50) x 100 = $350.00, a 6.03% return on the $5,800 cost of the shares. If the 30 days could be repeated that is 73.4% a year, which is why such figures flatter the trade.

Stock flat or slightly lower. Your breakeven is $58 - $1.50 = $56.50. At $56.50 you are even; at $58 you keep the full $150.00 premium, a 2.59% return; at $50 you lose $650.00.

Stock rallies to $65. You still make only $350.00. The extra $5 a share the stock gained goes to the buyer of the call.

Mistakes people make

• Treating the premium as free money. The stock can still fall much more than the premium.
• Forgetting the cap. If you would hate to lose the shares in a rally, a covered call is the wrong trade for that stock.
• Using the wrong cost. The profit formula uses your purchase price for the shares, not today's price.
• Ignoring early assignment and dividends. A call can be exercised before expiration, which can change the result.

Who this is for, and what it does not cover

It is for someone who owns at least 100 shares and is weighing a standard 100-share call contract. It does not model early assignment, dividends, taxes (see the note on options under Publication 550 if you want the tax treatment), spreads, adjusted contracts with a different share count, or closing the position before expiration, where time value matters.

Sources

Retrieved 2026-10-26. Each link was opened and checked against the claim next to it.

• Options Industry Council: Covered Call (Buy/Write): maximum gain = strike - stock purchase price + premium received; maximum loss = stock purchase price - premium received.
• Options Industry Council: Long Call: call buyer breakeven = strike + premium and the standard framing of what the buyer of your call receives.
• IRS Publication 550 (2025), Investment Income and Expenses: writers of puts and calls: the premium is not income when received but is deferred until the obligation expires, the call is exercised or you close it; on expiry it is short-term capital gain.