Covered Call Effective Sale Price
Effective per-share sale price if a covered call is assigned: strike price plus premium received. Reflects that the premium boosts the net price you realize when shares are called away.
When to use: Use to evaluate the upside cap on a covered call. If the underlying finishes above this number at expiration, you forfeit the gain above it — a useful sanity check before writing a call against shares you might want to keep.
Formula
Variables
| Symbol | Name | Description | Unit |
|---|---|---|---|
| EffectivePrice | Effective Price | Effective per-share price after accounting for premium | $ |
| Strike | Strike Price | Exercise price of the option contract | $ |
| Premium | Premium per Share | Cash credit received per share for selling the option | $ |
Real-Life Examples
Example 1: $200 Strike, $3.00 Premium
You sold a $200-strike covered call for $3.00 of premium. The call is assigned at expiration.
Given
Step-by-Step
Your effective sale price on the called-away shares is $203 — a 1.5% premium over strike. If the stock finishes above $203, you have left money on the table relative to simply holding.
Frequently Asked Questions
Yes — algebraically. The buyer of the call profits above Strike + Premium; the seller of the call effectively sells shares at Strike + Premium. Same number, opposite vantage.
Dividends paid during the holding period add to your effective sale price (you keep them on top of the premium and strike). On dividend-paying stocks this can meaningfully bump the realized return.