The Covered Calculator is a view on the Calls and Puts Option Chains which shows calculations for Covered Call (Buy-Write & Unwind) or Covered Put (Sell-Write & Unwind) trades.
Commissions and dividends are not included in the calculations, so be mindful of their effect and timing.
Inputs | |
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Stock Price |
Choose to base the calculations using a stock price from the market: Ask for Covered call calculations and Bid for Covered Put calculations, or input a cost you want to use as the stock price.
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Shares | Enter the number of shares you would like to run the calculations with. The calculations will assume 1 option is traded for every 100 shares . |
Target Price | Used to calculate the return on the covered call or covered put strategy if the target price is reached. |
Outputs | |
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Max Gain |
Shows in Dollars the maximum amount you could make from that trade. This would assume that the option expires with an assignment. If assigned on Calls, you would be selling the stock, and if assigned on puts you would be buying the stock back.
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% Max Gain |
The % return if the max gain is reached, expressed as a % of the initial investment price, calculated as follows:
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Static ROI |
Static Return on Investment shows, in Dollars, the return if the stock price did not move from the current price and the option was to expire. Calculations:
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% Static ROI |
The Static ROI represented as a %.
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Target ROI |
Target Return on Investment shows, in Dollars, the return if the target price is reached at expiration. The Target price can be any price the stock could reach, and could be used to see what the profit or loss would be at that target price. Calculations:
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% Target ROI |
The Target Return on Investment expressed as a %
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Break Even |
The price the stock could reach at expiration where the profit or loss is 0 for the strategy based on the inputs. Assumes a profitable transaction, so when a profit is not possible, shows “—“.
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% Protection |
Due to the nature of Covered Call and Covered Put strategies, there is a degree of hedging that takes place by selling the option against the stock position.
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Commissions, taxes, and transaction costs are not included in any of these strategy discussions, but can affect final outcome and should be considered. Please contact a tax advisor to discuss the tax implications of these strategies. Many of the strategies described herein require the use of a margin account. With long options, investors may lose 100% of funds invested. In-the-money long puts need to be closed out prior to expiration, since exercising them could create short stock positions.
Options carry a high level of risk and are not suitable for all investors. Certain requirements must be met to trade options through Schwab. Multiple leg options strategies will involve multiple commissions. Please read the options disclosure document titled "Characteristics and Risks of Standardized Options." Member SIPC