How is annualized yield calculated for a covered call?

Annualized yield = (Premium ÷ Cost basis) × (365 ÷ days to expiration). The if-called annualized return also bakes in any upside to the strike plus dividends collected before expiration.

What strike should I sell a covered call at?

Most income sellers target a 0.20 to 0.35 delta strike — this gives a ~65–80% probability the call expires worthless, balancing premium income with the risk of having shares called away.

What is early-assignment risk on a covered call?

Before an ex-dividend date, if the upcoming dividend exceeds the call's remaining time value, a rational holder of the long call will exercise early to capture the dividend. Our calculator flags this scenario explicitly.

How much can you make selling covered calls?

Typical annualized yields for 30-day, 0.30-delta covered calls on liquid US equities range from 10% to 35%, depending on the underlying's implied volatility. High-IV names yield more but carry larger downside risk.

Is the data real-time?

Yes. The covered call calculator loads the live option chain from Polygon when you enter a ticker. After-market hours it uses the day's closing prices.

Free Covered Call Calculator with Annualized Yield & Ex-Div Warnings

How a covered call works

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

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How a covered call works