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Covered Call Return Calculator

Work out covered call return instantly with clear inputs, formula shown and shareable results.

About Covered Call Return Calculator

A covered call sells upside above the strike in exchange for premium today. The static return is what you keep if the stock is unchanged; the if-called return adds the capital gain up to the strike and is the realistic best case.

Formula

Covered call returns

Static = premium / (price - premium); if called = (strike - price + premium) / (price - premium)

Worked example

With the default values below, Covered Call Return Calculator returns Return If The Stock Is Called Away of 9.053%. Change any input above and every figure here is recalculated in your browser.

Inputs used

Stock Purchase Priceminimum 0
1,000
Call Strike Priceminimum 0
1,060
Premium Receivedminimum 0
28
Days To Expiryaccepts 1–365
30

Results

Return If The Stock Is Called Away
9.053%
Return If The Stock Stays Flat
2.881%
Annualised If-Called Return
110.151%
Downside Cushion From The Premium
2.800%

Step by step

  1. 1Values used
  2. 2Covered call returns
  3. 3Return If The Stock Is Called Away= 9.053
  4. 4Return If The Stock Stays Flat= 2.881
  5. 5Annualised If-Called Return= 110.151
  6. 6Downside Cushion From The Premium= 2.800

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax, fees or charges or compounding frequency into account.
  • Figures are rounded for display to 3 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • Figures are estimates for planning only. Market returns are not guaranteed, and rates, limits and tax rules change. This is not financial or tax advice — speak to a qualified adviser before acting.
  • This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Figures are estimates for planning only. Market returns are not guaranteed, and rates, limits and tax rules change. This is not financial or tax advice — speak to a qualified adviser before acting.

Frequently Asked Questions

What is the main risk?

Giving up a large rally. Your upside is capped at the strike while all the downside below it remains yours.

Which strike should be chosen?

Higher strikes keep more upside but earn less premium. The choice encodes your view on the stock.

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