{
  "id": "covered-call",
  "version": "d2134ea5a7cf",
  "status": "published",
  "name": "Covered Call Calculator",
  "question": "What is my covered call return?",
  "summary": "Computes the return, break-even price, maximum profit and maximum loss of a covered call (shares owned plus a call written on them), and the profit or loss at any stock price at expiration.",
  "category": "finance",
  "subcategory": "investing",
  "url": "https://www.acalculator.org/finance/covered-call-calculator",
  "markdown": "https://www.acalculator.org/finance/covered-call-calculator.md",
  "kind": "function",
  "method": "Per share at expiration: profit = min(S, K) − S₀ + P; maximum profit = K − S₀ + P; break-even = S₀ − P; maximum loss = S₀ − P. Times 100 shares per contract.",
  "assumptions": [
    "Every price is typed; no quote is looked up.",
    "Each contract covers 100 shares that you own. The result is at expiration; commissions, taxes and dividends are not included.",
    "Arithmetic is exact on the typed decimals; money rounds once to the cent and percents to 2 decimals.",
    "This is an estimate, not investment advice."
  ],
  "inputs": {
    "$schema": "https://json-schema.org/draft/2020-12/schema",
    "type": "object",
    "properties": {
      "stock": {
        "title": "Stock purchase price (per share)",
        "description": "What you paid for each share, or the share price when you wrote the call.",
        "type": "number",
        "x-unit": "USD",
        "exclusiveMinimum": 0,
        "maximum": 1000000000
      },
      "strike": {
        "title": "Call strike price",
        "description": "The price at which the buyer of the call can buy your shares.",
        "type": "number",
        "x-unit": "USD",
        "exclusiveMinimum": 0,
        "maximum": 1000000000
      },
      "premium": {
        "title": "Premium received (per share)",
        "description": "The price of the call, per share, that you received for writing it.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000
      },
      "contracts": {
        "title": "Contracts",
        "description": "How many calls you wrote. Each covers 100 shares, so you hold 100 shares per contract.",
        "type": "integer",
        "minimum": 1,
        "maximum": 1000000
      },
      "at": {
        "title": "Stock price at expiration",
        "description": "A stock price on the expiration date, to see the profit or loss there.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000
      }
    }
  },
  "outputs": {
    "maxProfit": {
      "label": "Maximum profit (if called away)",
      "description": "(Strike − purchase price + premium) × shares: the result when the stock ends at or above the strike.",
      "format": "money"
    },
    "calledReturn": {
      "label": "Return if called away",
      "description": "(Strike − purchase price + premium) ÷ purchase price × 100.",
      "format": "percent"
    },
    "premiumYield": {
      "label": "Premium return (downside cushion)",
      "description": "Premium ÷ purchase price × 100: the return if the stock ends where you bought it.",
      "format": "percent"
    },
    "breakEven": {
      "label": "Break-even price",
      "description": "Purchase price − premium: the stock price at expiration where the position neither gains nor loses.",
      "format": "money"
    },
    "maxLoss": {
      "label": "Maximum loss (stock at $0)",
      "description": "(Purchase price − premium) × shares: the loss if the stock falls to $0.",
      "format": "money"
    },
    "premiumIncome": {
      "label": "Premium received",
      "description": "Premium per share × shares.",
      "format": "money"
    },
    "profit": {
      "label": "Profit or loss at the expiration price",
      "description": "(The lower of the expiration price and the strike − purchase price + premium) × shares.",
      "format": "money"
    },
    "returnAt": {
      "label": "Return at the expiration price",
      "description": "Profit or loss at the expiration price ÷ (purchase price × shares) × 100.",
      "format": "percent"
    }
  },
  "defaultAnswer": {
    "inputs": {
      "stock": 68,
      "strike": 70,
      "premium": 2.2,
      "contracts": 1,
      "at": 65
    },
    "outputs": {
      "maxProfit": 420,
      "calledReturn": 6.176470588235294,
      "premiumYield": 3.235294117647059,
      "breakEven": 65.8,
      "maxLoss": 6580,
      "premiumIncome": 220,
      "profit": -80,
      "returnAt": -1.1764705882352942
    },
    "text": "Buying at $68.00 and writing the $70.00 call for $2.20 gives at most $420.00 (6.18%) if the shares are called away."
  },
  "examples": [
    {
      "given": {
        "stock": 68,
        "strike": 70,
        "premium": 2.2,
        "contracts": 1,
        "at": 65
      },
      "expect": {
        "maxProfit": 420,
        "calledReturn": 6.176470588235294,
        "premiumYield": 3.235294117647059,
        "breakEven": 65.8,
        "maxLoss": 6580,
        "premiumIncome": 220,
        "profit": -80,
        "returnAt": -1.1764705882352942
      },
      "source": "U.S. Securities and Exchange Commission, Investor.gov, \"An Introduction to Options – Investor Bulletin\" (ABC at $68 and the ABC December 70 call at $2.20; one contract is 100 shares; the call writer must sell at the strike if the call is exercised). https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins-63; Options Industry Council, \"Covered Call (Buy/Write)\": long 100 shares and short 1 call; maximum gain = strike price − stock purchase price + premium received; maximum loss = stock purchase price − premium received; break even = starting stock price − premium received. https://www.optionseducation.org/strategies/all-strategies/covered-call-buy-write; hand calculation in content.mdx: (70 − 68 + 2.20) × 100 = 420; 68 − 2.20 = 65.80; (65 − 68 + 2.20) × 100 = −80"
    },
    {
      "given": {
        "stock": 68,
        "strike": 70,
        "premium": 2.2,
        "contracts": 1,
        "at": 80
      },
      "expect": {
        "profit": 420,
        "returnAt": 6.176470588235294
      },
      "source": "U.S. Securities and Exchange Commission, Investor.gov, \"An Introduction to Options – Investor Bulletin\" (ABC at $68 and the ABC December 70 call at $2.20; one contract is 100 shares; the call writer must sell at the strike if the call is exercised). https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins-63; Options Industry Council, \"Covered Call (Buy/Write)\": long 100 shares and short 1 call; maximum gain = strike price − stock purchase price + premium received; maximum loss = stock purchase price − premium received; break even = starting stock price − premium received. https://www.optionseducation.org/strategies/all-strategies/covered-call-buy-write: above the strike the gain stops at the maximum, (70 − 68 + 2.20) × 100 = 420"
    },
    {
      "given": {
        "stock": 58,
        "strike": 60,
        "premium": 1.5,
        "contracts": 2,
        "at": 55
      },
      "expect": {
        "maxProfit": 700,
        "breakEven": 56.5,
        "maxLoss": 11300,
        "profit": -300,
        "premiumIncome": 300
      },
      "source": "Options Industry Council, \"Covered Call (Buy/Write)\": long 100 shares and short 1 call; maximum gain = strike price − stock purchase price + premium received; maximum loss = stock purchase price − premium received; break even = starting stock price − premium received. https://www.optionseducation.org/strategies/all-strategies/covered-call-buy-write; hand calculation in content.mdx: (60 − 58 + 1.50) × 200 = 700; 58 − 1.50 = 56.50; (55 − 58 + 1.50) × 200 = −300"
    }
  ],
  "sources": [
    "Options Industry Council, \"Covered Call (Buy/Write)\": long 100 shares and short 1 call; maximum gain = strike price − stock purchase price + premium received; maximum loss = stock purchase price − premium received; break even = starting stock price − premium received. https://www.optionseducation.org/strategies/all-strategies/covered-call-buy-write (retrieved 2026-10-18)",
    "U.S. Securities and Exchange Commission, Investor.gov, \"An Introduction to Options – Investor Bulletin\": the ABC December 70 call at $2.20 with ABC at $68; a contract generally represents 100 shares; the buyer may exercise at any time before expiration and the writer must sell at the strike. https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins-63 (retrieved 2026-10-18, read in a browser)"
  ],
  "related": [
    "options-profit",
    "stock-profit",
    "dividend-yield",
    "roi"
  ],
  "changelog": []
}