Covered call income calculator
Work out how much premium income your shares could produce. Set your share count, the premium you typically collect, how often you write and how often you actually get filled.
Contracts you can write
5
All shares covered
Premium per cycle
$510.00
Average monthly income
$517.08
Projected annual income
$6,205.00
Monthly yield on capital
1.03%
Annual yield on capital
12.41%
On $50,000.00 of stock
Reading the projection honestly
- Only whole lots of 100 shares can be written against, so odd lots sit idle and drag your real yield below the headline number.
- The fill percentage matters more than most people expect. Skipping earnings weeks, waiting for better implied volatility, or being assigned and sitting in cash all cut the number of cycles you actually collect.
- Premium is not free money. In a strong rally the shares get called away and your total return is capped near the strike, so income should be measured against buy-and-hold, not against zero.
- Assignment interrupts compounding: once shares are gone you either buy back in, often higher, or rotate into a new underlying.
Frequently asked questions
- How much income can covered calls generate?
- Most retail writers target roughly 0.5% to 2% of position value per month, depending on how close to the money they write and how volatile the underlying is. Higher premium always means a higher chance of assignment, so income and share retention trade off against each other.
- Do I need 100 shares to sell a covered call?
- Yes. Each option contract covers 100 shares, so you need at least 100 shares of the underlying to write one covered call without taking on naked risk.
- Is covered call income guaranteed?
- No. Premium is received up front and is yours to keep, but the shares can fall by more than the premium collected, and if the stock rallies past the strike the shares are called away and you forfeit further upside.
- How is covered call income taxed?
- Treatment depends on your country and holding structure. In most jurisdictions premium is a capital or trading gain and assignment triggers a disposal of the shares. Check with a local tax adviser — this page is educational only.
Track every covered call automatically
OptionHarvest logs each call you sell, rolls premium into your breakeven, updates prices daily and tells you exactly which positions are at risk of assignment. Free demo — no credit card required.