Covered call calculator
A covered call means selling a call option against 100 shares you already own. You collect a premium now. In return, if the stock ends above the strike price at expiration, the option is exercised and you sell those shares at the strike price.
What happens at expiration
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Plain-English terms
- Option contract
- An agreement that covers 100 shares of a stock.
- Strike price
- The price written into the contract. It is the price shares change hands at if the option is exercised.
- Premium
- The money the option seller collects up front. You keep it no matter what happens next.
- Days to expiration (DTE)
- How many calendar days remain before the contract ends.
- Assignment
- When the buyer exercises the option and you must carry out your side of the deal: sell your shares. Most exercise happens at expiration, but the buyer can also exercise early.
- Breakeven
- The share price at expiration where the position neither makes nor loses money.
- Annualized return
- A single period's return scaled up to one year. It assumes you could repeat the same trade all year, which is not guaranteed.
- Covered
- You own the 100 shares the call is written against.
- Cash-secured
- You hold enough cash to buy 100 shares at the strike if assigned.
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Covered call guides by ticker
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