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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.

Stock Price Paid
Shares (lots of 100)
Option Strike Price
Option Market Price
Expected Market Price
Annual Yield ($)*
Years Owned*


  1. Stock Price Paid: amount paid by the investor to buy shares.
  2. Shares: Shares owned by the investor. To sell covered call options, the original investor must have at least 100 shares. Options are traded in lots of 100, so shares must be bought in lots of 100 to sell covered calls.
  3. Option Strike Price: price at which the option will be excercised for the underlying stock. In covered calls, the call option strike price is the price at which the original investor will sell their stock to another investor.
  4. Option Market Price: current market value of a call option. This price can be above the actual value, which is calculated by subtracting option strike price from the stock's current price. Option quotes can be found at Yahoo Finance.
  5. Option Total Profit = Strike Price Value - Initial Investment + Option Income; this is the amount of money generated as income from selling one covered call.
  6. Option Investment Value = initial investment + option total profit; this is the final value of your investments after using options to gain income. This value is based on the underlying stock reaching the strike price and being sold to another investor at that price.
  7. Expected Market Price = can be the expected price of the underlying stock in the future or the current market price of the stock.



More Reading:

Chicago Board of Options Exchange
Javascript Math Functions
Converting Strings to Numbers


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About the site and its author: Joseph K. Sunny, Jr., M.D. Most of the pages are created from my reading or clinical experience.

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