Max profit
$941.76
Covered call calculator
Owns 100 shares and sells a call against them for income. Enter your strikes and price to see the maximum profit, maximum loss, breakeven, profit chance and expected value.
Leave the price empty to estimate it from implied volatility. Results are per contract (100 shares), held to expiration.
Estimated credit: $41.76 per contract (from implied volatility; type your real price above)
Max loss
−$9,958.24
Breakeven
$99.58
Profit chance ?
50.9%
Expected value ?
+$24.34
Reward to risk
0.09 to 1
Get the full verdict on this trade
Free, no account. The app adds volatility skew, exit plans, position sizing and a plain-English verdict.
How to use the covered call calculator
- Enter the stock's price, the days left until expiration and the implied volatility from your option chain.
- Enter each strike. Then type the credit you'd receive per share, or leave it empty for an estimate.
- Add the stock's realized volatility to see expected value: what the trade makes on average if the stock keeps moving the way it has been.
Worked example
Say a stock trades at $100, options price in 25% implied volatility, and the stock has really been moving about 20% a year (its realized volatility). With 30 days to expiration, a covered call at strike 109 collects about $0.42 per share, or $41.76 per contract.
- Max profit: $941.76
- Max loss: $9,958.24
- Breakeven: $99.58
- Profit chance, market-implied: 50.9%
- Expected value with 20% realized volatility: +$24.34 per contract
The expected value is positive here only because the stock is assumed to move less than options price in (20% vs 25%). If it moves more, the same trade can have negative expected value. That gap between implied and realized volatility is what the full app checks first.
What is a covered call?
A covered call buys (or holds) 100 shares and sells one out-of-the-money call.
How it makes or loses money
You keep the call's credit, but give up gains above the call strike. Below, you own the shares and lose as they fall, cushioned by the credit.
When traders use it
Used for income on shares you're happy to hold.
Profit and loss at expiration
- Max profit: call strike minus share price, plus the credit
- Max loss: share price minus the credit (if the stock went to zero)
- Breakeven: share price minus the credit
The Greeks
| Greek | Sign |
|---|---|
| Delta | + |
| Theta | + |
| Vega | − |
| Gamma | − |
What to watch out for
- The downside is the shares': size on the stress loss.
- Index options like SPX have no shares; covered calls are for stocks and ETFs.
Questions
What is the max profit on a covered call?
Call strike minus share price, plus the credit. In the example above that's $941.76 per contract.
What is the max loss on a covered call?
Share price minus the credit (if the stock went to zero). In the example above that's $9,958.24 per contract.
How do you calculate the breakeven of a covered call?
Share price minus the credit. The calculator works it out from your strikes and price.
What does "profit chance" mean here?
It's the market-implied chance that the trade finishes with any profit at expiration, if the stock moves as much as implied volatility prices in. It assumes you hold to expiration and uses one volatility for every strike. A high profit chance doesn't mean a good trade: small, frequent wins can still lose money overall if the losses are large.
What's the difference between implied and realized volatility?
Implied volatility is how much movement option prices assume. Realized volatility is how much the stock has actually been moving. Option sellers tend to come out ahead on average when realized stays below implied, and buyers when it runs above. Expected value in this calculator uses the realized volatility you enter.
Is a covered call a good trade?
This calculator can't tell you that, and neither can anyone who doesn't know your account, goals and risk tolerance. It shows the math for the numbers you enter. Whether those numbers hold up depends on the price you actually get, how the stock moves and how you manage the trade.