How to Set Up a Covered Call Screener in thinkorswim on Schwab (Step-by-Step)

The Short Answer: Yes, thinkorswim Can Screen Covered Calls

You can build a covered call screener directly inside thinkorswim (ToS) on Schwab using the Scan tab. Set filters for stock price, option delta, days to expiration, and minimum premium — then save the scan so it runs in seconds every morning. This article walks you through every click, plus a worked example using Apple (AAPL) so you can see real numbers before you trade.

What You Need Before You Start

You need a Schwab brokerage account with options trading enabled. If you transferred from TD Ameritrade, your ToS login now runs through Schwab's platform but the interface is nearly identical. Log in at Schwab, click 'thinkorswim' from the Trade menu, and open the desktop platform — the web version has a lighter scan tool, but the desktop version gives you the full filter set described here.

You also need to own at least 100 shares of the stock you plan to write calls against, or be prepared to buy them. The Options Industry Council (OIC) defines a covered call as selling one call contract for every 100 shares you hold long. If you sell calls without owning the shares, that is a naked call — a very different and much riskier position that requires higher margin approval from your broker.

Step-by-Step: Building the Scan in thinkorswim

Step 1 — Open the Scan tab. At the top of the ToS desktop platform, click the 'Scan' tab. You will land on 'Stock Hacker' by default. That is the right place.

Step 2 — Add a stock price filter. Click 'Add filter', choose 'Stock', then 'Last'. Set the range to something you can afford to own 100 shares of. For example, $50 to $300 keeps mid-cap names in play without requiring a $50,000 position in a single stock.

Step 3 — Add a volume filter. Still under 'Stock', add 'Volume' and set a minimum of 500,000 shares per day. Thinly traded stocks have wide option bid-ask spreads that eat your premium before you collect it.

Step 4 — Switch to the Options filter group. Click 'Add filter' again, but this time choose 'Option'. This unlocks option-specific fields.

Step 5 — Filter by delta. Select 'Delta' from the option field list. For a classic out-of-the-money covered call, set delta between 0.20 and 0.35. Delta near 0.20 means the market prices roughly a 20% chance the call finishes in the money. The CBOE publishes educational material confirming that delta approximates the probability of expiring in the money for a simple single-leg option.

Step 6 — Filter by days to expiration (DTE). Add another option filter: 'Days to Expiration'. Set it to 21–45 days. This range captures the steepest part of the theta decay curve — the rate at which an option loses time value — which benefits the seller.

Step 7 — Filter by bid price (your minimum premium). Add 'Bid' under the option filters and set a floor, such as $0.50. That means you collect at least $50 per contract (one contract = 100 shares) before commissions. Schwab charges $0.65 per contract for options as of this writing, so a $0.50 bid barely covers costs. Many traders set the floor at $1.00 or higher.

Step 8 — Set option type to Call. Add a filter for 'Option Type' and select 'Call'. Also set 'In the Money' to 'Out of the Money' if that filter is available, or rely on your delta range to enforce it.

Step 9 — Run and save the scan. Click the green 'Scan' button. ToS will return a list of stocks meeting all your criteria. To save it, click the floppy-disk icon and name it something like 'CC Candidates 30DTE'. It will appear in your saved scans list every session.

Worked Example: Screening for an AAPL Covered Call

Suppose your scan returns Apple (AAPL) trading at $213.50. You already own 100 shares. The scan flagged the $220 call expiring in 32 days with a delta of 0.28 and a bid of $2.15.

Here is what that means in dollars: - Premium collected: $2.15 × 100 shares = $215 per contract - Maximum gain if AAPL stays below $220 at expiration: $215 (you keep the full premium) - Breakeven on the downside: $213.50 − $2.15 = $211.35 (your premium cushions a small drop) - If AAPL rallies above $220, your shares get called away at $220. You still keep the $215 premium, so your effective sale price is $222.15 per share — but you miss any gains above that level.

Annualized yield on this trade: ($2.15 ÷ $213.50) × (365 ÷ 32) = roughly 11.5% annualized, before taxes and commissions. That is not a guaranteed return — it assumes you repeat similar trades consistently and that AAPL does not drop sharply.

This example uses round numbers for illustration. Always check the live bid-ask spread before entering an order. A wide spread (for example, bid $2.00, ask $2.50) means the market maker captures $0.25 of your $2.15 if you hit the bid. Use a limit order at the midpoint and adjust from there.

Real Risks You Should Understand Before Running This Screen

Covered calls reduce risk compared to holding stock outright, but they do not eliminate it. Here are the three risks that matter most:

1. Downside is mostly unprotected. If AAPL drops from $213.50 to $185, your $2.15 premium offsets only $2.15 of that $28.50 loss. The covered call is not a hedge — it is a yield enhancer. FINRA reminds investors in its options disclosure materials that covered calls limit upside without providing meaningful downside protection.

2. You can miss large rallies. If AAPL jumps to $240 after you sold the $220 call, your shares are called away at $220. You earned $222.15 effective, but you left $17.85 per share on the table. This is called capped upside, and it is the direct trade-off for collecting premium.

3. Assignment can happen early. American-style equity options (which is what you trade on individual stocks like AAPL) can be exercised by the buyer at any time before expiration, not just on the last day. The OIC notes that early assignment is most likely just before an ex-dividend date. If your stock goes ex-dividend while your call is in the money, check whether early assignment risk is elevated.

Tax note: In the US, premiums collected from covered calls are generally treated as short-term capital gains in the year the position closes, per IRS Publication 550. If your call is exercised and your shares are sold, the premium is added to the sale proceeds. Canadian investors should consult CRA guidance on options income, as treatment can differ depending on whether the CRA classifies your activity as capital gains or business income.

How to Refine Your Scan Over Time

The default filters above are a starting point, not a final answer. Here are three adjustments experienced covered-call writers make:

Add an implied volatility rank (IVR) filter. ToS lets you filter by 'Implied Volatility' under the option filters. Higher implied volatility means fatter premiums. Many traders only sell covered calls when IV is elevated relative to the stock's historical range — that is the concept behind IVR. A rough rule: look for stocks where current IV is in the top 30–50% of its 52-week range.

Filter by earnings date. Avoid selling calls that expire after an upcoming earnings announcement unless you specifically want that volatility exposure. ToS does not have a built-in earnings filter in the scan, but you can cross-reference results against the Schwab earnings calendar before placing trades.

Narrow the universe to stocks you already own. The scan will return names you have never heard of. That is fine for research, but covered calls work best on stocks you are comfortable holding through a drawdown. If a name shows up in the scan but you would panic-sell it at a 15% drop, it is not a good covered-call candidate for you regardless of the premium.

Saving Time: ToS Watchlist Integration and Alerts

Once your scan is saved, you can push results directly to a ToS watchlist. Click the 'Actions' button in the scan results panel and choose 'Send to Watchlist'. Name it 'CC Watchlist' and it will update each time you run the scan.

You can also set a ToS alert to notify you when a stock in your watchlist crosses a price level. Go to the MarketWatch tab, right-click any ticker, and choose 'Set Alert'. This is useful if you want to sell a covered call only when a stock bounces to a specific resistance level rather than chasing it at any price.

For mobile users, the Schwab mobile app includes a simplified version of the options chain but does not replicate the full scan tool. Do your screening on the desktop platform, then execute on mobile if needed.

Is thinkorswim on Schwab the same as the old TD Ameritrade thinkorswim?

Yes, Schwab acquired TD Ameritrade in 2020 and migrated all accounts to Schwab in 2023. The thinkorswim platform is functionally the same desktop application, including the Scan tab used for covered call screening. Your saved scans and watchlists transferred over automatically for most users.

What delta should I use when screening covered calls?

Most covered-call sellers target a delta between 0.20 and 0.35 for out-of-the-money calls. A delta of 0.30 means the market implies roughly a 30% chance the call expires in the money. Lower delta means less premium but a smaller chance of having your shares called away.

How many days to expiration is best for a covered call screener?

The 21-to-45-day window is the most commonly cited range because time decay (theta) accelerates meaningfully in that period, benefiting the option seller. The CBOE's educational materials on theta decay support this general framework. Going shorter than 21 days reduces premium significantly; going longer than 60 days ties up your shares for a long time.

Can I screen for covered calls on ETFs like SPY in thinkorswim?

Yes, ETFs like SPY, QQQ, and IWM appear in the thinkorswim scan results and have very liquid options markets with tight bid-ask spreads. SPY options are among the most actively traded in the world according to CBOE volume data. The same delta and DTE filters apply.

Are covered call premiums taxed as ordinary income or capital gains?

In the US, premiums from covered calls are generally treated as short-term capital gains when the position closes, not ordinary income, per IRS Publication 550. If the call is exercised and your shares are sold, the premium is factored into your sale proceeds. Canadian investors should check CRA guidance, as the tax treatment can vary based on trading frequency and intent.

What happens if I forget to close a covered call before expiration?

If your call expires in the money and you do nothing, your broker will automatically assign your shares to the call buyer — you sell 100 shares at the strike price. If the call expires out of the money, it expires worthless and you keep the premium with no further action needed. FINRA recommends confirming your broker's auto-exercise threshold, which at most US brokers is $0.01 in the money at expiration.