What happens if my strike is below my cost basis?

Being assigned still locks in a loss on the stock itself, since you would sell below what you paid. The premium collected partially offsets that loss but does not necessarily eliminate it, depending on how far below cost basis the strike sits.

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How much income can I collect and what's my breakeven if I sell a covered call?

Q: How much income can I collect and what's my breakeven if I sell a covered call?

Enter your stock cost basis, the call strike you sold, the premium received, and your contract count. Total income equals the premium times 100 shares times contracts. Breakeven equals your cost basis minus the premium collected.

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Enter Your Covered Call

Your Result

Fill in your cost basis, strike, premium, and contracts, then click Calculate to see your income and breakeven price.

How this is calculated

Total premium collected equals your premium per share multiplied by 100 shares per contract and your number of contracts.
Breakeven price equals your stock cost basis minus the premium you collected, since the premium reduces your effective cost in the stock.
Max profit if the stock is called away equals your strike price minus your cost basis, plus the premium, multiplied by 100 and your contracts. This only represents a full gain if your strike is at or above your cost basis. If your strike is below your cost basis, being assigned still locks in a loss on the stock, partially offset by the premium.
This assumes a standard equity option contract represents 100 shares, and that you already own the shares before selling the call. It does not include commissions, taxes, or dividends.

Risk & liability disclaimer: This calculator produces a mathematical estimate based on the numbers you enter. It is not financial advice and does not guarantee any trading outcome. Options trading involves risk of loss, including the risk of early assignment on your short call, and past option strategies do not predict future results. Trading Habits is not a broker-dealer, registered investment adviser, or tax professional, and is not affiliated with any broker, exchange, or data provider. We do not guarantee this tool is error-free or suitable for your situation, always verify results independently and consult a licensed professional before making any trading or financial decision. You could lose some or all of the capital you trade with.

How much income can I collect and what's my breakeven if I sell a covered call?

Enter Your Covered Call

Your Result

How this is calculated

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