Covered Call & Cash-Secured Put Calculator

How it works

A covered call means owning 100 shares per contract and selling a call against them: you collect the premium now, and if the stock is above the strike at expiry your shares are called away at that strike. A cash-secured put means selling a put while holding enough cash to buy the shares if assigned.

The tool reports the returns income traders actually compare: the static return if the stock is unchanged and not called, the if-called (or if-assigned) return, your breakeven, and the downside protection the premium buys. Returns are annualized on a simple 365-day basis so trades of different lengths are comparable.

Worked example

Own 100 shares at $100, sell the $105 call for $3.00, 30 days to expiry:

• Premium income = $3 × 100 = $300; breakeven = 100 − 3 = $97.
• Static return (unchanged, not called) = 300 / 10,000 = 3.00% → annualized 3% × 365/30 = 36.5%.
• If called at $105: profit = (105 − 100) × 100 + 300 = $800 = 8.00% → annualized ≈ 97.3%.
• Downside protection = 3 / 100 = 3.0%.

The formula

covered call:
  static return    = (premium + current_price − cost_basis) / cost_basis
  if-called return = (strike − cost_basis + premium) / cost_basis
  breakeven        = cost_basis − premium
cash-secured put:
  premium yield    = premium / strike
  breakeven        = strike − premium
annualized = period_return × 365 / days

Current price defaults to your cost basis, so the static return is simply premium / cost_basis unless you enter a different current price (which adds the unrealised current − cost move).

FAQ

What's the difference between static and if-called return?

Static assumes the stock is unchanged and the call expires worthless (you keep the shares and premium). If-called assumes the stock finishes above the strike and your shares are sold at the strike.

How is the return annualized?

Simple 365-day basis: period return × 365 ÷ days. It does not compound, so it's comparable across trade lengths but not a guaranteed yearly figure.

What is downside protection?

How far the stock can fall before you start losing money, expressed as the premium divided by the current price.

What is a good annualized return on a covered call?

There is no fixed number, but income traders often target roughly 1-4% premium per month (about 12-50% annualized) on liquid stocks. Higher annualized yields usually mean a closer strike or a more volatile stock, so they carry more assignment and downside risk. Compare the static and if-called figures, not just the headline yield.

How does this relate to the wheel strategy?

The wheel sells a cash-secured put first and, if assigned, sells covered calls against the shares. Each leg is priced here; the wheel strategy calculator frames the two as one repeating income cycle.