Covered call calculator — annualized yield, downside cushion, ex-div warnings

Enter your shares, strike, and premium — get five separately-labelled yield metrics (denominator visible on each), downside cushion, if-called return, and a market-implied finish-ITM proxy. Delayed chains via Polygon or Tradier (optional). Every result is stamped with the model version and quote-as-of timestamp.

Delta and the market-implied finish-ITM proxy are related but not the same as actual assignment probability. Delta is an option-price sensitivity; actual assignment depends on the price path, remaining extrinsic value, dividends, borrow, and holder exercise decisions. See Assignment probability.

Trade Inputs

Type a US-listed symbol
$

Delayed close-anchor from Polygon.io Options Starter. Not real-time. After-hours moves not reflected. If your broker shows a different current price, that is expected. Why we’re delayed →

$
What you paid per share
1 contract = 100 shares
Load chain to populate
Pick an expiration first
$
Auto-fills from chain; override to model your own price
Annualized decimal (0.28 = 28%)
$

Results

Premium income
—
per contract × contracts
Static yield
—
— annualized
If-called yield
—
— annualized
Downside cushion
—
Premium / Spot
Breakeven
—
Cost basis − Premium
Days to expiry
—
—

Payoff Diagram

How does a covered call work?

Covered call methodology, formulas, and worked examples

Formula

Cycle yield = premium ÷ capital at risk. Annualized screen yield = cycle yield × (365 ÷ DTE). It is a comparison metric, not a forecast or projected annual return.

Conservative example

SPY at $580, 30-day $590 covered call (OTM by 1.7%), mid premium $3.20. Capital at risk $59,000. Cycle yield = $3.20 ÷ $590 = 0.54%. Annualized screen yield = 6.6%. Delta 0.20 → ~20% finish-ITM (assignment) probability.

Aggressive example

TSLA at $260, 14-day $265 covered call (just OTM), mid premium $7.40. Cycle yield = $7.40 ÷ $265 = 2.79%. Annualized = 72.7%. Delta 0.42 → ~42% finish-ITM. Position-size carefully; expected assignment in nearly half of cycles.

Losing outcome

NVDA at $400, 30-day $410 covered call for $5.00 premium. NVDA drops to $360 by expiration. The $410 call expires worthless (you keep $5.00 = +1.25%) but the stock is down $40 = -10%. Net P&L = -$35 = -8.75%. The premium did not offset the underlying decline.

Inputs, commissions, and not modeled

Inputs: ticker, strike, expiration/DTE, mid-of-bid-ask premium, cash/margin assumption. Default commission: $0.65 per contract per leg. Default slippage: 25% of bid-ask spread. Not modeled: tax treatment, margin interest, dividend-driven early assignment (handled per-ticker), IV crush around earnings.

Related metric definitions

For the full mathematical methodology, see methodology. Educational only — not investment advice. See the disclaimer.