Free tool
Covered call calculator
Once you own 100 shares, a covered call pays you to agree to sell them at a set price. This calculator shows what the call pays, your total profit if the shares get called away, and whether the strike is above what the shares really cost you.
Example numbers are filled in. Change any box and the results update. Educational only, not financial advice.
How the numbers work
- Your cost per share: what the shares really cost you. If you got them through a put, use the strike minus the put premium. The wheel tracker works this out for you.
- Premium collected: premium per share × 100 × contracts, minus fees.
- Return on share value: premium ÷ what the shares are worth today, for this one trade.
- Profit if called away: (strike − your cost) × shares, plus the premium. This is the most the trade can make.
- New break-even: your cost per share minus this premium. Each call you sell lowers it a little.
My rule: only sell calls at or above my real cost, so getting called away never locks in a loss. More in Step 2: How to sell a covered call. Before you own shares, use the cash-secured put calculator.
Questions
What happens if my covered call gets exercised?
Your shares are sold at the strike price, usually at expiration. You keep the premium. Your profit is the strike minus what the shares cost you, plus the premium.
Should I sell a covered call below my cost basis?
If the shares get called away, you'd lock in a loss on them. Many wheel traders, including me, only sell calls at or above their real cost and wait for a better price instead. It's your call, but know the number before you sell.
How is covered call return calculated?
The simplest way is premium ÷ the value of the shares. If the call also has room above your cost, the return if called away adds that gain on the shares too.