| Buy-Write Strategy (Covered Call) | ||||||
|---|---|---|---|---|---|---|
| Action | Quantity | Price | Cost Amount | Current Price | ||
| Buy | $0.00 | |||||
| Action | Option Symbol | Strike Price | Quantity (Contracts) | Price (Per Share) | Premium | Expiration Date |
| Sell to open | $0.00 | |||||
| Days to Exp (DTE) | 30 | |||||
| Breakeven Price | $0.00 | |||||
| Max Profit (if Assigned) | $0.00 | |||||
| Return if Assigned (%) | 0.00% | |||||
| Ann. Return (if Assigned %) | 0.00% | |||||
| Projected P/L | $0.00 | |||||
| Profit Rate (%) | 0.00% | |||||
| Net Cost / Share | $0.00 | |||||
Here's a simple breakdown of what the calculated numbers mean, helping you understand the potential outcomes of your Covered Call strategy:
What it is: Simply, the number of calendar days left until your option contract expires and ceases to exist.
Why it matters: Time is a key ingredient in option pricing. As an option seller, time decay (called "Theta") generally works in your favor – the option loses value each day, which is good if you want it to expire worthless. DTE also helps calculate annualized returns for comparison.
What it is: The stock price at which you'd neither make nor lose money on your initial investment (stock cost minus premium received), if the option expires without being assigned (i.e., the stock price finishes below the Strike Price).
Why it matters: This is your safety net price for the overall setup. If the stock price stays above this level at expiration (and doesn't get called away), your initial cash outlay is covered. Think of it as your adjusted stock cost after getting the premium "discount".
What it is: The absolute best possible profit you can make specifically on the shares covered by the option, but only if the stock price goes up to (or above) the Strike Price and your shares get "called away" or "assigned" (meaning you're forced to sell them at the Strike Price).
Why it matters: It clearly shows the upside limit for the covered part of your trade. You're agreeing to potentially sell those shares at the Strike Price in exchange for the premium. This number helps you decide if that trade-off (capped upside for premium now) is worth it. Note: It doesn't include profit/loss on any shares you own that are NOT covered by the option.
What it is: Takes the "Max Profit (if Assigned)" amount and shows it as a percentage return on the money effectively invested in just the covered shares (your cost for those shares minus the premium received for them).
Why it matters: Percentages make comparisons easier! This tells you how good the potential return is relative to the capital tied up in the covered portion, if you achieve the best-case "assigned" scenario.
What it is: An estimate of what the "Return if Assigned (%)" would look like if you could repeat this exact same percentage return consistently over a full year.
Why it matters: This helps you compare opportunities with different expiration dates (e.g., a 1-month vs. a 3-month option) on a more standardized basis. Be careful: Short-term options often show very high annualized rates that can be difficult to achieve consistently in reality.
What it is: An estimate of your current profit or loss on the entire position (all your shares + the option premium) based on the "Current Price" you entered for the stock.
Why it matters: This shows how your trade is performing right now. Unlike "Max Profit" (which looks at a specific future outcome), this tracks the present value. It helps you decide if you might want to close the trade early or monitor its progress.
What it is: Takes the "Projected P/L" amount and shows it as a percentage of your initial net investment (your total cost for all shares minus the total premium received).
Why it matters: This gives you a quick percentage view of your current estimated performance relative to your initial cash outlay for the whole position.
What it is: Your average purchase price for each share of stock you own, after factoring in the "discount" from the option premium you collected (spread across all shares).
Why it matters: It shows your effective cost basis per share for your records and helps see how much the premium lowered your entry point.
Disclaimer: This calculator provides informational estimates based on your inputs. It does not constitute financial advice. Option trading involves risks and may not be suitable for all investors. Consult with a qualified financial advisor before making any investment decisions.