Covered Call & Cash-Secured Put Calculator
Compare income trades quickly. See the return if nothing happens, the return if your shares are called away, the annualized yield, and how much cushion the premium gives you.
How to use
- Choose covered call or cash-secured put.
- Enter the stock price, strike, premium per share, and days to expiration. For covered calls you can add dividends expected before expiration.
- Compare the static and if-called returns. Annualized figures help you compare trades of different lengths, but they assume you can repeat the trade at the same rate.
Formulas explained
Conventions vary. Some sites divide by the full stock price instead of the net cost. This tool states the basis it uses next to each figure.
Worked example Hypothetical
Hypothetical: buy 100 shares at $50 and sell a 30-day $52.50 call for $1.10. Net cost = $48.90. Static return = 1.10 / 48.90 = 2.25% (≈27.4% annualized). If called: (1.10 + 2.50) / 48.90 = 7.36%. Breakeven = $48.90, so there is 2.2% downside protection.
FAQ
Is annualized return realistic?
It is a comparison tool. It assumes you can repeat the same trade back to back, which ignores losing months, assignment, and changing premiums.
What happens below breakeven?
You lose on the stock, minus the premium. The premium only cushions the loss; it does not cap it.
Covered call or cash-secured put?
At the same strike and expiration they have nearly identical payoff shapes (put-call parity). The differences are capital use, dividends, and assignment mechanics.
Covered call and cash-secured put calculator explained for beginners
What this tool does
It shows the income, returns and breakeven for two common income strategies: selling a call against shares you own (covered call), or selling a put with cash set aside to buy the shares (cash-secured put).
What each input means
- Strategy
- Pick covered call or cash-secured put.
- Stock price
- The price the stock trades at right now. Use the last price from your broker or a quote site.
- Strike
- For a covered call, the price you agree to sell your shares at. For a cash-secured put, the price you agree to buy shares at.
- Premium per share
- The money you collect for selling the option, per share.
- Days to expiration
- Calendar days until the option expires. Count from today to the expiration date on the contract.
- Dividends before expiration
- Any dividend per share you expect to receive while the option is open (covered call only).
- Contracts
- How many contracts you sell. Each covers 100 shares.
How to read the results
Static return is what you earn if the stock does not move. Called-away return is what you earn if the shares are sold at the strike. Annualized figures scale the return to a year so you can compare trades of different lengths; they are not a promise you could repeat the trade every month. Breakeven is the stock price where you start losing money.
A short worked example (hypothetical)
Covered call: you own 100 shares at $100 and sell a $105 call for $2. If the stock stays below $105, you keep the $200. If it ends above $105, your shares are sold for $105, and your total gain is ($5 + $2) × 100 = $700. Breakeven is $98.
Common mistakes
- Looking only at the annualized return.
- Forgetting a covered call does not protect you from a large drop in the stock.
- For a cash-secured put, not keeping the full strike × 100 in cash.