EXAMPLE
Covered call
Illustrative example
- Underlying
- $200.00
- Premium income
- $420
- Breakeven
- $195.80
- Total position max profit
- $1,420
- Max loss
- -$19,580
- Expires
- 2026-10-16
Premium strategy tool
Covered Call Screener & Trading Signals
A covered call sells one call option for every 100 shares you own. You receive the premium now, and in exchange you accept that the shares can be called away if the stock finishes above the strike.
TradingSignalAI's covered-call tool starts from the share lots you record in your account, so candidates are sized to what you actually hold rather than to a generic watch list.
Product preview
The chart below is the same payoff component used inside the platform, run on the hypothetical example described later on this page.
Covered call
Shares plus a short call: premium is collected, upside stops at the strike, and the stock can still fall.
Illustrative example
- Own100 shares
- Sell$210 call
Profit zoneLoss zoneStock priceBreakeven
- Example stock
- $200.00
- Premium income
- $420
- Breakeven
- $195.80
- Total position max profit
- $1,420
- Max loss
- -$19,580
- Evaluated at
- Expiration
Assumes 100 already-owned shares. Total-position P/L includes stock changes from the $200.00 signal reference, not historical cost basis. The existing Max profit income metric remains premium-only.
Payoff scenario
Illustrative example, read-only. Hypothetical inputs run through TradingSignalAI's payoff model.
Illustrative example
- Hypothetical underlying
- $200.00
- Premium income
- $420 ($4.20/share)
- Position · standard 100-share contracts
- 100 owned shares · sell one $210 call
Covered-position payoff
1 contract · 100 covered 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
- $195.80
- Strikes
- $210.00
- Payoff profit cap
- $1,420
- Max loss
- $19,580
The chart shows underlying prices from $171.80 to $234.00 only. Losses or gains outside this window can be larger; the window's lowest and highest points are not maximum risk.
Assumes 100 already-owned shares. Total-position P/L includes stock changes from the $200.00 signal reference, not historical cost basis. The existing Max profit income metric remains premium-only.
Uses the signal sell bid; before commissions, financing, exercise/assignment costs and taxes.
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.
Covered call, built step by step
Hypothetical example. Not a quote or a result. Premium income and total position payoff are different figures.
Illustrative example
Own 100 shares
Reference price $200.00 per share, a scenario baseline rather than your real cost basis.
Sell one $210 call
Strike is 5% above the stock. You give up gains above $210 at expiration.
Collect the premium
$4.20 bid x 100 = $420, received up front, before fees.
Premium income only
$420
The scanner's premium figure. Excludes any stock gain or loss.
Total covered-position payoff, best case at expiry
$1,420
$420 premium plus $1,000 of stock gain from $200 to the $210 strike. Breakeven $195.80, which is the $200 reference minus the premium.
Below the short strike
Stock $199.50
$370 P/L
The call expires unused. You keep shares and premium, and stock losses still count against you.
At the short strike
Stock $210.00
$1,420 P/L
Total position payoff is at its maximum. The call has no value at expiration.
Above the short strike
Stock $220.50
$1,420 P/L
Shares can be called away at $210, so the payoff stays capped however high the stock goes.
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 covered calls tool works
- Record holdings in your account. Covered-call candidates are built from recorded 100-share lots.
- The scanner reviews listed calls inside your expiration window and removes contracts that fail strategy filters such as delta ceiling and liquidity checks.
- Remaining contracts are compared on premium, normalized return, strike distance above the stock, days to expiration and spread width.
- Open a signal to see details and a payoff scenario for the whole stock-plus-call position, then decide for yourself and place any order with your own broker.
Metrics you will see
| Metric | Meaning |
|---|---|
| Premium | Call bid times 100 per contract. This is the income figure, and it excludes any stock gain. |
| Delta | A sensitivity measure often used as a rough, non-guaranteed indicator of assignment likelihood. |
| Strike distance | How far above the stock price the call strike sits. A larger distance leaves more room for stock gains. |
| Normalized return | Premium divided by the share value covered, scaled across expirations for comparison. A comparison tool, not an income promise. |
| Spread and liquidity | Bid-ask width, open interest and volume help judge whether a quoted premium is realistically achievable. |
Worked example: premium versus whole-position payoff
You own 100 shares at a $200 signal reference. You sell one $210 call at a $4.20 bid with 13 days to expiration.
| Item | Calculation |
|---|---|
| Premium income | $4.20 x 100 = $420 (premium only, before fees) |
| Stock-position breakeven | $200 - $4.20 = $195.80 |
| Maximum whole-position gain | ($210 - $200) x 100 + $420 = $1,420 at or above $210 |
| Whole-position result at $190 | -$1,000 stock + $420 premium = -$580 |
| Theoretical worst case | Stock to $0: -$20,000 + $420 = -$19,580 |
The $420 premium and the $1,420 whole-position maximum are different numbers. The chart plots the whole position from the $200 reference, not from your historical cost basis.
Risks to understand
- The stock can fall by much more than the premium collected. Covered calls reduce risk only by the amount of premium received.
- Upside above the strike is given up. If the stock rallies sharply, you keep the strike price plus premium, not the rally.
- Calls can be assigned before expiration, especially around dividends, so shares can be delivered earlier than planned.
- Taxes, commissions and wide bid-ask spreads change real outcomes and are not part of a research ranking.
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
- 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 Delta: Sensitivity, Not a GuaranteeLearn what delta measures, how call and put deltas differ, and why a delta-based probability estimate is not a guaranteed assignment or profit forecast.
- 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.
- 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.
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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.