Covered Call Opportunity Cost Wedge
Adjust the stock price, strike, premium, and one-sigma move to compare annualized return on investment at expiration versus the underlying move.
X-axis = underlying price percentage change from the current stock price. Y-axis = annualized ROI percentage using the underlying price as capital base and 30 DTE, so covered-call outcomes already include the underlying stock-position return plus option premium.
Symbols table baseline
Baseline comparison is using the AAPL row from the Covered Call Symbols table.
Hypothetical covered call yield: 6.00% • Preserve Equities: 4.00%
Modeled total ROI incl. stock
If AAPL is called away at +$311.72, the analyzer models 73.11% annualized ROI including the stock move and premium.
Gap vs. table yield
Versus the symbols-table baseline, the modeled total ROI is +67.11%.
Versus Preserve Equities, the gap is +69.11%.
Payoff comparison at expiration
Blue = long stock annualized ROI. Cyan = covered call annualized ROI. The red wedge shows annualized ROI percentage points given up after the cross-over.
What the wedge means
The wedge measures annualized ROI percentage points the covered call gives up versus long stock once the underlying rises beyond +$314.72 (+6.01%).
Assignment intuition
Before the strike, both annualized ROI lines move together. Above the strike, the short call caps more upside, while premium only offsets part of that foregone annualized return.
Why this comparison matters
The symbols table yield is a quick hypothetical screen, while this analyzer shows a modeled covered-call ROI that includes the underlying stock-position return. Using both helps compare screening yield versus total-position outcome.
Extreme move scenarios
Scenario outcomes below show annualized ROI percentages using the same 30 DTE.
| Scenario | Price at expiration | Underlying move | Long stock annualized ROI | Covered call annualized ROI | Opportunity cost |
|---|---|---|---|---|---|
| +2σ Upside | +$306.08 | +3.10% | +37.70% | +50.00% | 0.00% |
| +5σ Upside | +$319.88 | +7.75% | +94.26% | +73.11% | +21.15% |
+2σ Upside
Scenario price: +$306.08 (+3.10%). Markers show annualized ROI at that outcome.
+5σ Upside
Scenario price: +$319.88 (+7.75%). Markers show annualized ROI at that outcome.
* These calculations are for educational purposes only and should not be used to make investment decisions.
Hypothetical extrapolated gross premium yield percentages are modeled under the assumption that the underlying stock price stays at or below the covered call strike price through expiration; values are annualized and illustrative rather than realized performance.
Hypothetical Extrapolated Gross Premium Yield = (Theoretical Net Credit ÷ Underlying Equity Value) × (365 ÷ Days to Expiration).
Hypothetical Covered Call Yield (no Preserve Equities): mean of model-derived annualized gross premium yields under the assumption that the underlying stock price stays at or below the covered call strike price through expiration. Preserve Equities: uses the same formula and assumption but averages only over a stricter, lower-delta set chosen to reduce assignment risk and maintain long-share exposure.
Maximum loss for a covered call can approach the full value of the underlying stock if the price falls toward zero, partially offset only by any option premium collected; investors can lose almost the entire underlying value even when hypothetical premium yields appear high.
These hypothetical gross yield figures exclude brokerage commissions, regulatory and exchange fees, bid-ask spreads and slippage, financing costs, and taxes; including such costs would reduce any realized results.