Wheelhouse Options logo
    WheelhouseOptions
    ScreenersExample Trade: Covered Call

    Understanding Covered Call Results

    Let's walk through a covered call screener result step by step. We'll use Apple (AAPL) with a Conservative risk profile to explain the key metrics for this income strategy.

    What is a Covered Call?

    A covered call is an income strategy where you already own shares of a stock and sell call options against them. You collect premium in exchange for agreeing to potentially sell your shares at the strike price.

    You receive premium
    Immediate income deposited to your account
    Cap your upside
    If stock rises above strike, shares get called away

    The Setup

    Underlying
    AAPL
    Apple Inc.
    Risk Profile
    Conservative
    High safety, lower yield
    Strategy
    Covered Call
    Income on owned shares
    Requirement
    100 shares
    ≈ $25,561 at current price

    The Screener Output

    Below is the actual output from the covered call screener. We've numbered the key metrics so you can reference the explanations that follow.

    Screened1
    Analyzed605
    Matches10
    TickerStrikeDTE / ExpPremiumCushionIV/HVPOPAnn. Yield
    AAPL
    $285.001
    32d
    2026-02-27
    2
    $0.973
    11.5%4
    1.405
    85%
    6
    4.3%7

    Option Details

    Est. Stock Price
    $255.618
    Breakeven$254.63
    Max Profit (if called)
    $3,0379
    Max Loss (if stock → $0)$25,463
    Called Away At$285.00

    Risk Metrics

    Volatility
    Implied Vol27.5%
    Historical Vol25.6%
    IV/HV Ratio1.40
    Upside Cushion11.5%
    Greeks
    Delta (Δ)0.104
    Gamma (Γ)0.0087
    Theta (Θ)-0.061
    Vega (ν)0.137

    Backtest Analysis10

    Data Points756
    Not Called Away646
    Called Away110
    Success Rate85.4%
    History Period3 years

    What Each Metric Means

    1

    Strike Price

    $285.00

    The strike price is the price at which you agree to sell your AAPL shares if the option is exercised. At $285, the buyer can purchase your 100 shares at this price regardless of how high AAPL trades.

    For covered calls: A higher strike gives you more room for the stock to appreciate before getting called away, but comes with lower premium.

    2

    Days to Expiration (DTE)

    32 days

    This option expires on February 27, 2026, which is 32 days away. The Conservative profile targets 30-60 DTE for covered calls.

    Why this timeframe: Longer DTE provides more premium while still allowing reasonable time decay. You can repeat this strategy multiple times per year.

    3

    Premium

    $0.97 per share

    You receive $0.97 per share ($97 total for one contract of 100 shares) immediately when you sell this call. This is yours to keep no matter what happens to the stock.

    Income regardless of outcome: Whether your shares get called away or not, the $97 premium is yours to keep.
    4

    Upside Cushion

    11.5%

    The cushion for covered calls represents how much AAPL can rise before your shares get called away. With an 11.5% cushion, AAPL (currently ~$255.61) would need to rise above $285 for assignment to occur.

    Think of it as your upside participation. You keep all gains up to $285. Beyond that, you still profit, but your shares are sold.
    If AAPL stays below $285
    Keep shares + keep premium
    If AAPL rises above $285
    Shares sold at $285 + keep premium
    5

    IV/HV Ratio

    1.40

    This ratio compares Implied Volatility (27.5%) to Historical Volatility (25.6%). At 1.40, implied volatility is 40% higher than what AAPL has actually moved historically.

    Below 0.8
    Options Cheap
    0.8 - 1.2
    Fair Value
    Above 1.2
    Options Rich ✓

    A ratio of 1.40 means you're being paid generously for the call you're selling — the market is pricing in more volatility than has actually occurred.

    6

    Probability of Profit (POP)

    85%

    For covered calls, "success" means your shares are not called away — you keep your shares and collect the full premium. Based on 3 years of historical data, there's an 85% probability that AAPL would stay below $285 over similar 32-day periods.

    Note: Being "called away" isn't necessarily bad — you still profit! You just sell your shares at $285 instead of keeping them.
    7

    Annualized Yield

    4.3%

    If you repeated this exact trade throughout the year (selling covered calls on your 100 shares), your annualized return from premiums would be approximately 4.3%.

    How it's calculated:
    Premium: $97
    Stock Value: $25,561
    Return per trade: 0.38%
    Annualized (×365/32 days): 4.3%

    This is pure income on top of any stock appreciation. Think of it as getting paid rent on shares you already own.

    8

    Estimated Stock Price & Breakeven

    $255.61 / $254.63

    The current AAPL price is approximately $255.61. Your breakeven is the stock price minus the premium received: $255.61 - $0.97 = $254.63.

    What this means: Even if AAPL drops to $254.63, you break even because the premium offsets the decline. The covered call provides a small buffer against downside.

    9

    Maximum Profit (If Called)

    $3,037

    Your maximum profit occurs if AAPL rises to or above $285 and your shares are called away. This includes both the stock appreciation and the premium:

    Stock gain: ($285 - $255.61) × 100 = $2,939
    Premium received: $97
    Total max profit: $3,036

    Getting called away is a profitable outcome — you just don't participate in gains beyond $285.

    10

    Backtest Analysis

    756 data points

    The screener analyzed 756 historical scenarios (approximately 3 years of trading days) to determine how often AAPL stayed below the equivalent strike level.

    646
    Not Called Away
    Keep shares + premium
    110
    Called Away
    Sell shares at strike + premium

    Note: "Called Away" scenarios are still profitable — you just realize gains via stock sale rather than continued ownership.

    Covered Call vs Cash-Secured Put

    Covered Call

    • You already own the shares
    • Generate income on existing holdings
    • Risk: stock declines (but you'd have that risk anyway)
    • Caps upside if stock rallies significantly

    Cash-Secured Put

    • You want to buy shares at a lower price
    • Get paid to wait for your entry price
    • Risk: assigned shares at strike (but you wanted them)
    • Requires cash collateral equal to strike × 100

    Trade Summary

    What You're Agreeing To

    • 1
      Own 100 shares of AAPL (≈$25,561)
    • 2
      Receive $97 premium immediately
    • 3
      If AAPL stays below $285: keep shares + premium
    • 4
      If AAPL rises above $285: sell shares at $285 + keep premium

    Key Takeaways

    High keep-shares probability
    85% historical success rate
    Favorable volatility
    IV/HV of 1.40 means rich premiums
    Room to run
    11.5% upside before assignment

    Ready to find covered call opportunities?

    Use the screener to discover income opportunities on stocks you already own.

    Open CC ScreenerSee CSP Example