Covered call calculator
See the income yield if the stock stays flat and the total return if your shares get called away, the second leg of the wheel strategy.
How a covered call pays you
A covered call is a call option you sell against 100 shares you already own. You collect a premium right away. If the stock finishes below the strike, the call expires worthless, you keep the premium, and you still hold the shares to do it again. If the stock finishes above the strike, your shares are called away at the strike, and you walk away with the premium plus whatever the shares gained up to that price.
The two returns that matter
The static return is the premium divided by your cost per share, annualized for the days you hold the call. It answers what you earn if the stock does nothing. The if-called return adds any gain from your cost up to the strike, so it answers what you earn if the shares are assigned. When the strike is above your basis, being called away is a good outcome. When it is below your basis, assignment locks in a loss on the shares, which is why the calculator flags that case.
The second leg of the wheel
Covered calls are how the wheel keeps paying after you own shares. Many wheel traders arrive at their shares by first selling a cash-secured put, getting assigned, and then writing calls against the position until it gets called away. Then the cycle starts again.
Track your basis and income automatically
This calculator handles one call. Telemetry handles the whole position. Its options wheel tracker folds every premium you collect into your cost basis, so you always know your true break-even and the real annualized return. The full picture is in the options wheel calculator.
Common questions
What is a covered call?▾
A covered call is a call you sell against 100 shares you already own. You collect a premium up front. If the stock stays below the strike, you keep the premium and the shares. If it rises above the strike, your shares are called away at that price, and you keep the premium plus any gain up to the strike.
How do you calculate covered call returns?▾
There are two returns. The static return is the premium divided by your cost per share, annualized for the days to expiration, assuming the stock is unchanged. The if-called return adds any gain from your cost up to the strike, then annualizes the total. This calculator shows both.
What happens if my strike is below my cost?▾
Selling a call at a strike below what you paid means being assigned would lock in a loss on the shares, even after the premium. The calculator flags this so you do not accidentally cap your position below your basis.
How does this fit the wheel strategy?▾
Covered calls are the second leg of the wheel. After a cash-secured put assigns you shares, you sell covered calls against them for more income until they get called away, then you start over. Telemetry tracks both legs and folds every premium into your cost basis.
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