Premium yield, what you make if the shares get called away, and where your basis actually sits.
Trade details
Results
A call on assigned shares
Assigned 100 shares at $50 having collected $1.20 on the put. Net basis $48.80.
Sell a 30-day $52 call for $0.90 → $90.
Net basis falls to $47.90.
If called away at $52: ($52 − $47.90) × 100 = $410.
Never sell a strike below your net basis
It's the most common way a profitable wheel becomes a losing one, and it happens exactly when the position is underwater and the higher strikes have stopped paying. Getting called away below your basis locks in a loss the premium won't cover.
A covered call is not downside protection — the cushion figure above makes that concrete. If you want an actual floor under a holding, that's a collar, and it costs you the upside.
Covered Calls
Renting out shares you already own — and the one strike rule that stops it going wrong.
Educational only
These figures come from the numbers you enter and standard options arithmetic. Nothing here is investment, financial, or tax advice, and a good-looking return says nothing about whether the underlying stock is a good idea.
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