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Covered Call Calculator
Selling covered calls is a way to generate income on stock ownership. First, buy at least 100 shares of a company. Second, find options trading for the commodity. Third, sell the options to buy the 100 shares at a specified price. When the time comes for the option to expire, the buyer of the option can take the shares from the owner of the stock at the specified price. If the option strike price is above the price paid by the original investor, the investor makes both profit from the higher sale price and profit from the sale of the options. Part of the option profit is the premium: the price difference between the actual value of option and the market price of the option.
Multiple scenarios can exist when selling covered calls. They can be used not only to sell shares at a higher price but also to guarantee selling them at a lower price. The latter scenario can be used to lock in a profit at a certain price. The calculator can be used to analyze multiple scenarios.
Below is a covered call selling option calculator. Enter price paid, shares, option strike price and expected price. Calculates profit and percent return both in terms of stock investment and option selling. Can also calculate total return including dividends. Please read the glossary below.*Optional
More Reading: http://www.coveredcallstutorial.com/
About the site and its author: Joseph K. Sunny, Jr., M.D. Most of the pages are created from my reading or clinical experience.