Total Premium Income
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Return on Investment
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Breakeven Price
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Max Profit (if assigned)
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When Should You Use This?
Use this calculator before selling covered calls to understand the risk/reward. Covered calls generate income but cap your upside. Best used on stocks you're willing to sell at the strike price.
How It Works
1
Enter Position
Input the current stock price, strike price of the call you want to sell, and the premium you'll receive.
2
Set Cost Basis
Optional: enter your actual cost basis if different from current price. This affects your true max profit calculation.
3
Evaluate the Trade
Compare ROI to just holding. If the stock stays below the strike, you keep the shares AND the premium. If it goes above, shares get called away at the strike.
Frequently Asked Questions
A covered call means selling a call option on shares you already own. You collect the premium immediately. If the stock goes above the strike, you sell your shares at the strike price.
Best in sideways or mildly bullish markets. Sell at a strike you'd be happy selling the stock at. Avoid selling calls right before earnings or catalysts if you want to keep the stock.
You keep the premium, which cushions the loss. Your breakeven is stock price minus premium received. The premium provides downside protection but doesn't eliminate loss risk.
Max profit = (strike - cost basis + premium) x shares. You earn this if the stock is exactly at or slightly above the strike at expiration.
You can lose if the stock drops more than the premium received. The covered call reduces loss compared to holding stock alone, but doesn't eliminate it.