Strategy guide
Covered call profit calculator guide
A covered call combines long shares with a short call; premium reduces basis, but upside is capped above the strike.
Formula focus
Example: own shares at $100 and sell a 110 call for $3.00. Breakeven is $97. Maximum upside at or above $110 is roughly $13 per share before costs.
Practical limitations
The clean formula assumes a target price at expiration. Real fills, spreads, early assignment, exercise decisions, implied volatility, and time remaining can all change the actual outcome.
Use the calculator
Open the calculator and compare at least three target prices: bearish, base case, and bullish. If one adverse scenario is unacceptable, the trade may be too large or poorly structured.
Primary reading: OIC Profit and Loss Simulator · FINRA options overview · SEC Investor Bulletin on options · OIC options pricing overview