Covered call yield calculator

Yield per week beats raw premium

A $2.40 premium on a 60-day call looks better than $1.50 on a 30-day call until you divide by time. The first earns 0.28% per week on a $100 stock, the second 0.35%. Yield per week normalises expiries and is the cleanest way to decide which chain is actually paying you the most for the risk of having your shares called away.

Annualised numbers are useful for comparison but should never be read as an expected return. They assume the same premium is available every cycle, that you always get filled, and that the underlying does not gap through your strike or collapse below your breakeven.

Frequently asked questions

What is a good covered call yield?

There is no universal number, but many writers of large-cap stock aim for 0.5% to 1.5% premium yield per 30-day cycle, roughly 6% to 18% annualised before assignment effects. Anything dramatically higher usually reflects elevated implied volatility and a genuinely higher chance of a large move.

How do you calculate covered call premium yield?

Premium yield equals premium received per share divided by the share price (or your cost basis) at the time you wrote the call. Divide by days to expiry and multiply by 365 to annualise it.

Should yield be measured on cost basis or current price?

Both are useful. Yield on current price tells you whether the trade is a good use of the capital you could redeploy today; yield on cost basis tells you how the position is performing against what you actually paid.

Does the dividend count toward covered call yield?

If you hold through the ex-dividend date and are not assigned early, the dividend adds to your total income yield. Deep in-the-money calls raise the risk of early assignment just before ex-dividend, which forfeits that dividend.