Covered Call If-Called Total Return

Simple annualized return for a buy/write opened on the trade date and assigned at expiration: premium plus strike minus initial stock purchase price, divided by that purchase price.

When to use: Use when stock purchase and call sale occur together. For shares acquired earlier, use their value when the call is sold for the new trade’s return, or measure the entire investment from its original purchase date.

Calculator

Formula

\text{If-Called Return} = \frac{\text{Premium} + (\text{Strike} - \text{StockBasis})}{\text{StockBasis}} \times \frac{365}{\text{Days to Expiration}}

Variables

Symbol	Name	Description	Unit
IRR	Annualized Return	Simple-annualized return assuming the option expires worthless	%
Today	Today's Date	Date the option is sold (trade date)	date
Expiration	Expiration Date	Date the option contract expires	date
Premium	Premium per Share	Cash credit received per share for selling the option	$
Strike	Strike Price	Exercise price of the option contract	$
StockBasis	Stock Purchase Price at Trade Date	Purchase price per share when this buy/write begins; use the same start date for stock and option	$

Real-Life Examples

Example 1: OTM CC with Capital Gain

Buy stock at 50 per share and sell the call on 2026-04-29; receive premium 1.2, strike 55, expiring 2026-06-13. Assume assignment at the strike on expiration.

Given

Today = 2026-04-29Expiration = 2026-06-13Premium = $1.20Strike = $55.00StockBasis = $50.00

Step-by-Step

1.Days to Expiration = 45

2.Total per-trade gain = 1.20 + (55 − 50) = 6.20

3.Per-trade yield = 6.20 / 50 = 0.1240 = 12.40%

4.Annualization factor = 365 / 45 = 8.111

5.If-Called Return = 0.1240 × 8.111 = 1.0058 = 100.58%

Result:100.5778%

Simple annualized if-called buy/write return is 100.5778%. Stock losses can exceed the premium; this is not a guaranteed return.

Example 2: ITM CC at Loss to Basis

Buy stock at 45 per share and sell the call on 2026-04-29; receive premium 0.8, strike 40, expiring 2026-05-29. Assume assignment at the strike on expiration.

Given

Today = 2026-04-29Expiration = 2026-05-29Premium = $0.80Strike = $40.00StockBasis = $45.00

Step-by-Step

1.Days to Expiration = 30

2.Total per-trade gain = 0.80 + (40 − 45) = −4.20

3.Per-trade yield = −4.20 / 45 = −0.0933

4.Annualization factor = 365 / 30 = 12.167

5.If-Called Return = −0.0933 × 12.167 = −1.1356 = −113.56%

Result:-113.5556%

Simple annualized if-called buy/write return is -113.5556%. Stock losses can exceed the premium; this is not a guaranteed return.

Frequently Asked Questions

No. A falling stock can lose much more than the premium received. The if-called amount describes assignment at the strike; static premium yield assumes unchanged stock value.

Dividends, commissions, taxes, financing costs and early assignment. Do not annualize historical stock appreciation over only the call’s remaining days.

Related Formulas

Covered Call Static Return (If-Not-Called)

Covered Call Annualized Return

Covered Call Effective Sale Price

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