EXAMPLE
Buy-write
Illustrative example
- Underlying
- $50.00
- Call premium
- $140
- Breakeven
- $48.61
- Total position max profit
- $389.35
- Max loss
- -$4,860.65
- Expires
- 2026-10-16
Premium strategy tool
Buy-Write Screener & Covered Call Research
A buy-write buys stock and sells a call against it as one entry. Unlike a covered call on shares you already own, the capital outlay, the premium and the called-away return are all part of one decision.
The Buy-Write finder compares those entry economics across candidates using a gross budget, so you can see what the position costs before you act.
Product preview
The chart below is the same payoff component used inside the platform, run on the hypothetical example described later on this page.
Buy-write
Shares and a short call opened together, so the premium lowers the effective cost of the shares.
Illustrative example
- Buy100 shares
- Sell$52.50 call
Profit zoneLoss zoneStock priceBreakeven
- Example stock
- $50.00
- Call premium
- $140
- Breakeven
- $48.61
- Total position max profit
- $389.35
- Max loss
- -$4,860.65
- Evaluated at
- Expiration
Includes the signal's option premium, fees and financing interest. Stock changes are measured from the signal entry price.
Payoff scenario
Illustrative example, read-only. Hypothetical inputs run through TradingSignalAI's payoff model.
Illustrative example
- Hypothetical underlying
- $50.00
- Call premium
- $140 ($1.40/share)
- Position · standard 100-share contracts
- Buy 100 shares · sell one $52.50 call
Buy-write expiration payoff
1 contract · 100 shares · expires 2026-10-16
Hover, touch, or focus the chart and use arrow keys to read P/L at a price.
- Shaded above $0: profit
- Shaded below $0: loss
- Solid line: P/L at expiration
- Dashed line: reference price
- Circle: break-even
- Dotted line: strike (values below)
- Break-even
- $48.61
- Strikes
- $52.50
- Payoff profit cap
- $389.35
- Max loss
- $4,860.65
The chart shows underlying prices from $42.61 to $58.50 only. Losses or gains outside this window can be larger; the window's lowest and highest points are not maximum risk.
Includes the signal's option premium, fees and financing interest. Stock changes are measured from the signal entry price.
Full stock downside remains possible; the view focuses on prices near the strikes. Taxes and unmodeled exit/assignment costs are excluded.
Move the pointer or focus the chart and use the left and right arrow keys to read profit or loss at each stock price. These are not live quotes or signals.
Buy-write, built as one order
Hypothetical example. Not a quote or a result.
Illustrative example
Buy 100 shares
Entry $50.00 per share in the example, $5,000 before fees.
Sell one $52.50 call
The call is sold against the new shares. Gains above $52.50 are given up.
Collect the premium
$1.40 x 100 = $140. The model also deducts $0.65 in fees, so breakeven is about $48.61.
Below the short strike
Stock $49.88
$126.85 P/L
The call expires unused. You hold shares bought at $50, cushioned only by the premium.
At the short strike
Stock $52.50
$389.35 P/L
Payoff is at its maximum: premium plus the stock rise to the strike.
Above the short strike
Stock $55.13
$389.35 P/L
Shares may be called away at $52.50. The payoff stays capped.
Metrics in pictures
Premium relative to capital
Covered call example, hypothetical inputs.
Illustrative example
Premium
$420
Capital
$20,000
100 shares at $200.00
Return
2.10%
13 days
Bar width = premium as a share of capital. $420 / $20,000 = 2.10%, or 0.162% per day over 13 days
Premium income only, before fees, taxes and any stock gain or loss. Per-day figures compare trades and do not promise the trade can be repeated.
Delta: directional exposure
Select a delta to see what it means for one call contract.
Illustrative example
Out of the money, delta 0.30
Moderate sensitivity. Sold options here collect more premium than at 0.15 and are more likely to finish in the money.
One standard contract has about 30 shares of price exposure: roughly $30.00 per small $1 stock move, or $0.30 per quoted share, with other inputs held constant.
Delta is a model sensitivity, not a probability forecast. Values shown are examples, not quotes.
How the buy-write tool works
- Set a budget. The finder sizes candidates by how many 100-share lots fit.
- Eligible stocks and calls are screened for liquidity, strike and expiration fit.
- Each candidate shows stock cost, premium income, financing interest and fees where modeled, breakeven and called-away return.
- The payoff view plots stock changes from the signal entry price and caps the upside at the strike.
Metrics you will see
| Metric | Meaning |
|---|---|
| Gross stock cost | Share price times shares purchased. |
| Net debit | Gross stock cost minus call premium. |
| Breakeven | Net debit per share, plus per-share fees and financing. |
| Called-away return | Profit if shares are sold at the strike, divided by net outlay. |
| Max lots | How many 100-share lots the budget supports. |
Worked example: entry economics
Buy 100 shares at $50.00 and sell one $52.50 call at a $1.40 bid. Assume $0.65 in fees and no financing.
| Item | Calculation |
|---|---|
| Gross stock cost | $50.00 x 100 = $5,000 |
| Premium income | $1.40 x 100 = $140 |
| Net debit before fees | $5,000 - $140 = $4,860 |
| Breakeven | ($4,860 + $0.65) / 100 = $48.61 |
| Maximum profit if called away | ($52.50 - $50.00) x 100 + $140 - $0.65 = $389.35 |
| Called-away return | $389.35 / $4,860 = about 8.0% over the holding period |
The 8.0% is a ceiling reached only at or above $52.50 at expiration. Below $48.61 the position loses money, and the stock can fall to zero.
Risks to understand
- You own the stock. A decline larger than the premium creates a loss, and the premium offsets only a small fraction of it.
- Upside is capped at the strike, while downside is not.
- Using margin adds interest cost and amplifies losses.
- Two-sided execution at the open can differ from displayed bid and ask prices.
Access
Strategy tools are part of Premium. A Free account can record holdings and cash and browse universe research. Registration alone is not a Premium subscription.
Eligible new customers can begin a 7-day Premium trial. A payment method is required, and the selected plan bills automatically at the end of the trial unless canceled. Registration alone is not a Premium subscription.
Frequently asked questions
Learn more
- Buy-Write Strategy: Cost, Income & ReturnLearn stock-plus-call entry economics. Separate gross stock cost, net debit, premium income and called-away return using a worked buy-write example.
- Covered Calls: Premium, Breakeven & AssignmentLearn how covered calls work, calculate premium and stock-position payoff, and understand capped upside, stock downside and early assignment.
- Options Premium: Quotes, Spreads & ExecutionLearn how option premium is quoted per share, how contract size changes cash amounts, and why bid, ask, midpoint and fill prices are different.
- Options Assignment: Share Delivery & RiskUnderstand exercise, early assignment, share delivery and expiration risk. Learn why covered positions and defined-risk spreads still need active review.
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Research the trade before you place it
Create a free account to record holdings and cash and browse universe research. Premium adds the strategy tools. Eligible new customers can start a 7-day Premium trial; a payment method is required and the plan bills automatically unless canceled. Registration alone is not a Premium subscription.