Covered call vs just selling the shares: the real math

You own 100 shares and you are tired of them. Two honest exits: hit the bid today, or sell a call against the lot and get paid to wait. The second trade is not ‘income on a stock you were going to hold anyway’ unless you were actually going to hold it. It is a sale with a maybe, and the maybe has a price. Here is that price on one real chain.

The comparison below uses the same AAPL snapshot as covered calls on shares you already own, the same 48-day window, and the engine’s own yield and probability functions. Every figure is reproducible from scripts/blog-numbers.mts. Quotes are 15-minute delayed.

The two exits, stated

Exit A is cash. $30,891 hits the account, the shares are gone, the dividend is gone, and so is every dollar of upside from here. Exit B is the 18 Sep $320 call: you keep the lot, the chain pays $782 for the right to call it away at $320, and you keep the dividend until (if) you are called. The AAPL covered-call page is the live version of this structure. Nothing in that sentence is a recommendation to write the call — it is a description of the contract.

What the call seller actually gets

The headline pair: a 2.5% coupon for 48 days, 19.2% annualized if the call expires and you sell another, an if-called return of 6.1% versus selling the shares today, and a 36.0% chance the shares are taken at an effective $327.82. Being called is not the sad branch of this comparison. If you were willing to sell at $30,891 today, being taken out at $32,782 is a better sale — $1,891 better. The call seller’s actual sad branch is the one where the stock does what stocks do on the way down, and you still own it.

The outcome table — every expiry price, both exits

Read the last column top to bottom. Below about $301 the sale wins, because the call seller is still holding a stock that dropped and the $782 did not cover the hole. From unchanged through the moon, the call seller is ahead of the sale by somewhere between the credit and $1,891 — and then the number stops. At $350 the call seller’s book is $32,782; holding naked would have been $35,000. The covered call missed $2,218 versus holding. Versus selling today, it still won $1,891. Those are different questions. Mixing them is how a covered-call post becomes a pep talk.

The drop you still eat

Selling the shares today is the only trade in this comparison that is done. A covered call is long 100 shares with a short call glued on. At $280 the call seller’s book is $28,782 against the sale’s locked $30,891. The premium absorbed $782 of a $2,891 mark-to-market hole. That is not a hedge. It is a cushion, and a thin one: 2.5% of spot against a 9.4% decline.

Traders who want the sale’s protection should sell. Traders who want the stock’s upside should hold, or collar the lot. Traders who want to be paid to maybe sell should write the call and stop pretending the premium is a put. The covered-call math on shares you already own is the sibling argument about which strike; this post is the argument about whether the sale is the benchmark.

Dividends, and the right you sold

Over these 48 days the engine’s 1.2% yield says the lot throws off about $49. The share-seller forgoes it. The call seller keeps it until assignment — and a $320 call on AAPL in this window is not a high-odds early-exercise candidate, but ex-dividend early assignment is a real risk on closer calls and is not modeled as zero. $49 will not change the table. It will change a close decision if you are one cent from a roll.

What you sold is the right tail. 36.0% of the time, in this model, AAPL finishes above $320 and the shares leave. The call seller does not get to ‘decide later’ without buying the call back. That buyback is a roll, and rolls have a net. If the reason you wrote the call was ‘I might want the stock if it runs,‘ you wrote the wrong contract.

Liquidity is the other silent term. The $320 call in this snapshot had tens of thousands of open interest; a 5-lot on a single-name weekly will not. If the credit on the screen is $7.82 and the bid is $7.40, Exit B just got 5% worse and the 2.5% coupon is no longer the number you were comparing to a marketable stock sale. Price the call you can actually sell, then compare. The builder will not lie about the bid if you look at it.

The call-side twin of the cash-secured put

The sibling post — cash-secured put vs buying the stock — asks whether to get long through a put. This one asks whether to get out through a call. They are the same shape of question: a defined-risk stock trade versus an option overlay, priced on a real chain, with the branch the overlay crowd prefers not to print. On MSFT the put seller’s bad branch is the stock they do not own ripping through the upside. On AAPL the call seller’s bad branch is the stock they do own falling through the floor. Both are computable. Neither is a slogan.

If you want this exact covered call in the builder, it is one click. The ladder will re-quote live; the pinned $7.82 is the snapshot, not a promise. Open the cash-secured put on the other side of the same name in a second tab if you are choosing an entry rather than an exit.