Trade Management Calculator™
How CallWriter tools take you all the way through the covered call trade, from entry to close.

Our Trade Management Calculator™ lets you actually manage live covered call trades. Should you close the trade, or roll up, or roll down, or roll out? Or should you stand pat? Our TM Calculator won't make trading decisions for you, but it will show you where the money is in covered calls. Our calculator takes you all the way through the trade. And it gives you price updates in an instant, with just a mouse click.

The First Row shows your return from buying shares of stock and writing the covered call, both if the call is not exercised and if it is exercised. The Second Row shows the result if you buy back the call and just sell the shares of stock. The Third and Fourth Rows show the results if you were to buy back the original call, but keep the stock and sell a different call (known as "rollovers" or "rolls"). Our TM Calculator pops up conveniently in its own window and stores up to 24 different covered call positions.

Here is a hypothetical covered call example, showing the effect of closing the trade and the potential results of a couple of different rolls:

NOTE: All returns are WITHOUT margin and before brokerage commissions and costs.

First Row: the Covered Call Write
Assume that with 30 days remaining before option expiration, you buy XYZ stock at $25/share and sell the $30 call for a premium of $2, which effectively reduces your cost basis in the stock to $23. This buy-write covered call trade sets up an 8% flat return (the return if the call is not exercised and the stock price remains the same) of $2.00 on your $25 stock buy, but your return will be $7.00/share if the call is exercised, a 28% return. Why is the if-called return so high? Because you received $2.00 for selling the call, plus you would make a profit of $5/share when the stock is called away (sold).

Second Row: the Close
A few days after entering the trade, the stock's price shoots up to $32, but your stock hasn't yet been called. The calculator tells you that if you buy back the $30 call, which will cost you $3.20, and sell the stock for $32, your immediate return on closing the trade would be a respectable $5.80/share, or 23.2%. This is a lower profit than simply letting the stock be called - however, you would get the $5.80 return immediately instead of waiting for the stock to be called, which might not occur until expiration, which is weeks away. And - there is never any guarantee the stock will be called out; it could pull back. Only you can decide which course is right for you.

Analysis: You received $2.00 for selling the call, bought the call back for $3.20, and made $7/share when you sold the stock. ($2.00 - $3.20 + $7 = $5.80). The $5.80 return is less than the $7.00 return available to you if you stay in the trade until expiration, but you get the $5.80 return immediately, freeing that capital for another trade. However, there is no assurance of being called out at the $30 price, because the stock could pull back before expiration.

Third Row: the First Roll
Instead of buying back the call and selling the stock, it may be more profitable to do a rollover - buy back the $30 calls and sell calls with a different strike price. If you buy back the original $30 call at a cost of $3.20 and sell the $25 call in the same expiration month for an $8.75 premium (known as rolling down to the $25 call), your cumulative return on the transaction when called out at $25 would be $7.55 per share, for a 30.2% return. Why? You received $2.00 for selling the original call, paid $3.20 to buy it back, but then received $8.75 for the $25 call.

Analysis: When called out you will be selling the stock for $25, which is $5.00 less than you paid, and you can still increase your returns by rolling down. This shows the power of covered calls! However, you probably will have to wait until expiration for the stock to be called, so the time remaining until expiration must be figured into the return.

Fourth Row: the Second Roll
But is an even better return out there? If you buy back the original $30 call and sell the $35 call in the same expiration month for a $3.00 premium (that is, roll up to the $35 call), your total return on the transaction if called out at $35 is a whopping $8.80 per share, or 35.2%. How? You received $2.00 for selling the original call, paid $3.20 to buy it back, then received another $3.00 for the $35 call. But you would also get $35 when the stock is called, which is substantially more than you paid for it.

Analysis: there is no guarantee the stock will be above the $35 strike at expiration and that you will be called out at $35. Remember that rolling up after a stock advances usually increases your trade debit. The stock could pull back before expiration, leaving you high and dry with an increased cost in the trade.

Auto-Update: Automatic Price Updates
Each row of the TM Calculator can be updated with a click of the [U] update button, which instantly refreshes your calculations based on 20-minute delayed prices. In order for the update to occur, the stock symbol and option symbol must be entered on the 1st Row. For the automatic update to work on the 3rd and 4th Rows, you must enter the symbol of the calls to which you are considering a roll.

Stock Fields: 24 Trade Positions
The stock fields on the bottom of the TM Calculator automatically keep track of up to 24 different covered call positions. All the data you enter for each stock is stored for you to update and watch to determine if it's time for you to change your position.

So which is the best strategy above? There is no way to know for sure until trade conclusion. But the TM Calculator shows you that you can immediately close your position with a 23.2% return and terminate all trade risk, freeing your funds for the next trade. If you are convinced the stock will continue to rise, the roll up shown in the 4th Row offers even higher potential returns, but those returns are in no way assured - the stock could stall out or even pull back - and you have to stay in the trade much longer to get the higher returns..

As always, the choice of action belongs to the trader. The TM Calculator simply gives you an instant profit readout on trade closes and the potential results of rolls. This is its power. And no one else on earth offers such a calculator.