Covered Call Screener: How to Filter by Monthly Income Target

The Short Answer: Yes, These Screeners Exist

Yes, there are covered call screeners that let you filter by a monthly income target. Tools like the CBOE's covered call screener, brokerage platforms such as Thinkorswim (TD Ameritrade/Schwab), Fidelity's options screener, and third-party sites like PowerOptions and OptionStrat all let you set a minimum premium yield or dollar income threshold before you see a single result. You type in what you want to earn, and the screener surfaces the stock-and-strike combinations that could get you there.

The catch — and it matters — is that a screener shows you what the market is offering right now. It cannot guarantee you will collect that income. Option premiums change by the minute, and the risk attached to a high-premium trade is always higher than the risk attached to a low-premium one. This article walks you through how to use these filters correctly, what the numbers actually mean, and where traders get burned.

How Income-Target Filters Actually Work

Every covered call screener that offers income filtering is doing the same math under the hood. It takes the option's bid price, divides it by the current stock price, and expresses the result as a percentage — usually on a monthly or annualized basis. That percentage is called the static return or premium yield.

For example: if a stock trades at $100 and the at-the-money 30-day call has a bid of $2.50, the monthly premium yield is 2.5%. Annualized, that is roughly 30%. When you set a filter like "show me only trades yielding at least 2% per month," the screener is simply hiding every row where that math comes out below your threshold.

Some screeners add a second layer: dollar income. Instead of (or in addition to) a percentage filter, you enter a number like "I want at least $300 per month per contract." Because one standard equity option covers 100 shares, a $300 target means you need a bid price of at least $3.00. The screener multiplies bid × 100 and compares it to your dollar floor.

A few platforms — OptionStrat and Thinkorswim's scan tab are good examples — let you combine both filters at once: minimum dollar income AND minimum percentage yield. That combination is more useful because it screens out both low-premium cheap stocks and low-yield expensive stocks simultaneously.

Worked Example: Building a $400/Month Target on AAPL

Let's make this concrete. Suppose you own 100 shares of Apple (AAPL), currently trading around $195. You want to generate at least $400 per month from a single covered call contract.

Step 1 — Set your dollar floor. You need a bid of at least $4.00 ($400 ÷ 100 shares).

Step 2 — Open the options chain for the nearest monthly expiration (roughly 30 days out). Scan the calls above the current price. At a $195 stock price, a $200 strike (about 2.6% out of the money) might carry a bid near $3.20. That falls short of your $4.00 target. The $195 strike (at the money) might show a bid around $4.50 — that clears your hurdle.

Step 3 — Check the percentage yield. $4.50 bid ÷ $195 stock price = 2.3% for the month. Annualized, that is roughly 27.6%. A screener with a 2% monthly minimum would surface this trade; one set to 3% would not.

Step 4 — Check delta. The $195 strike ATM call will have a delta near 0.50, meaning there is roughly a 50% chance the option expires in the money and your shares get called away at $195. If AAPL runs to $210 before expiration, you keep the $4.50 premium but miss the $15 upside above your strike. That is the real cost of the income.

Step 5 — Check open interest and bid-ask spread. AAPL is one of the most liquid options markets in the world (CBOE data consistently shows it in the top five by volume), so spreads are tight and fills are reliable. On thinly traded names a screener surfaces, the spread can eat half your premium before you even get filled.

Bottom line on this example: the $195 strike meets a $400/month income target, but it comes with meaningful assignment risk and caps your upside. The $200 strike is safer for your shares but does not hit the income target without accepting a lower bar.

What to Look for in a Screener Beyond the Income Filter

A monthly income filter is a starting point, not a finish line. Here are the additional columns you should require any screener to show before you act on a result.

**Open interest and volume.** FINRA and the Options Industry Council (OIC) both emphasize liquidity as a core risk factor for retail options traders. If open interest on a strike is below 500 contracts, your limit order may sit unfilled or you may have to give up significant edge to get a fill. Filter for open interest above 1,000 as a baseline.

**Bid-ask spread as a percentage of the bid.** A $0.10 spread on a $4.00 bid is 2.5% — acceptable. A $0.40 spread on a $1.20 bid is 33% — you are giving away a third of your premium in transaction friction. Some screeners show this directly; others make you calculate it.

**Days to expiration (DTE).** Most covered call income strategies target the 21-45 DTE window. The OIC notes that time decay (theta) accelerates most in the final 30 days of an option's life, which is why this window is popular. Screeners that let you set a DTE range prevent you from accidentally selling a 90-day option and tying up your shares for three months.

**Earnings date flag.** Selling a covered call over an earnings announcement dramatically inflates the premium — and the risk. Many screeners flag this. If yours does not, cross-check the earnings calendar manually before selling.

**Implied volatility rank (IVR or IV percentile).** A high IVR means premiums are elevated relative to the stock's own history. Selling when IVR is above 50 is generally considered favorable for income sellers. Some screeners include this; others do not.

The Risks You Need to See Before You Filter

Risks belong here, in the middle of the article, not buried at the bottom. Here is what the income filter does not show you.

**Assignment wipes out the income math.** If the stock closes above your strike at expiration, your shares are called away at the strike price. You keep the premium, but you sell the stock at a price that may be well below the market price on assignment day. The SEC reminds retail investors that covered calls limit upside participation — that is not a footnote, it is the core trade-off.

**High premium usually means high risk.** A screener set to "show me 4%+ monthly" will surface stocks with elevated implied volatility. Those stocks move more. A 4% monthly premium on a biotech or a meme stock is not the same risk profile as a 4% premium on SPY. The income looks identical in the screener; the downside does not.

**Tax treatment is not uniform.** In the US, the IRS treats premiums from covered calls as short-term capital gains in most cases, and selling certain in-the-money calls can suspend the holding period on your underlying shares, potentially converting long-term gains to short-term. In Canada, the CRA has its own rules around option premiums and adjusted cost base. Neither the screener nor this article is a substitute for advice from a qualified tax professional.

**Screener data can lag.** Most free screeners update quotes every 15-20 minutes during market hours. The bid you see at 9:45 a.m. may not be the bid at 10:15 a.m. Always verify the live quote in your brokerage before placing the order.

Which Screener Should You Actually Use?

The right screener depends on what you already have access to.

**Already using Thinkorswim (Schwab)?** The Scan tab under the MarketWatch section lets you build a custom scan with minimum bid price, DTE range, open interest floor, and underlying price range. It is free, updates in real time, and integrates directly with your order entry. This is the most powerful free option for active traders.

**Fidelity account?** Fidelity's options screener under the Research tab allows filtering by premium yield and expiration range. It is less customizable than Thinkorswim but easier to use for newer traders.

**Want a dedicated third-party tool?** PowerOptions and OptionStrat both offer income-specific filters including dollar targets, yield thresholds, and earnings flags. PowerOptions has been around since 1999 and is well-regarded in the retail covered-call community. Both charge a monthly subscription.

**CBOE's free tools.** The CBOE website offers a basic covered call screener under its education and tools section. It is a good starting point for understanding the mechanics, though it lacks the depth of brokerage-integrated tools.

One practical tip: run the same income target through two different screeners and compare results. Discrepancies usually come from quote timing or how each platform calculates the yield (using the bid versus the midpoint, for example). When in doubt, use the bid — that is the price you can actually sell at immediately.

A Simple Workflow to Go From Screen to Trade

Here is a repeatable process you can run in under 15 minutes.

1. Set your income target in dollar terms first. Decide how much you want per contract per month before you open any screener. 2. Open your screener of choice and enter: minimum bid = your dollar target ÷ 100, DTE range = 21 to 45 days, open interest minimum = 1,000 contracts. 3. Sort results by premium yield descending. Scan the top 10-15 results. 4. For each result, check: Is there an earnings announcement before expiration? Is the stock one you are comfortable owning at a lower price if it drops? Is the bid-ask spread under 5% of the bid? 5. Pick the one or two trades that pass all four checks. Verify the live quote in your brokerage. 6. Enter a limit order at the bid or one cent below the midpoint. Do not chase the midpoint on illiquid names. 7. Record the trade: stock, strike, expiration, premium collected, and the date. Tracking your actual results against your income target is the only way to know if your screener settings are working over time.

Is there a free covered call screener that filters by monthly income?

Yes. Thinkorswim (available free with a Schwab account) and Fidelity's options screener both allow income-based filtering at no extra cost. The CBOE also offers a basic free covered call tool on its website. For more advanced filtering, paid tools like PowerOptions or OptionStrat add features like IV rank and earnings flags.

How do I calculate how much premium I need to hit my monthly income goal?

Divide your monthly dollar target by 100, since one standard equity option contract covers 100 shares. If you want $500 per month per contract, you need a bid price of at least $5.00. Then divide that bid by the current stock price to get the percentage yield and compare it to what the market is offering.

Why does the screener show a high premium but I can't get filled at that price?

Most free screeners display delayed quotes, sometimes 15-20 minutes behind the market. The bid you see may have moved significantly by the time you place your order. Always check the live quote inside your brokerage platform before entering a limit order, and use the bid price — not the midpoint — as your realistic fill estimate on less liquid names.

Can I use a covered call screener income filter on ETFs like SPY?

Yes, and SPY is one of the most liquid options markets in the world according to CBOE volume data, so fills are reliable and spreads are tight. The trade-off is that SPY's lower implied volatility means premiums are smaller as a percentage of price, so hitting a high dollar income target requires selling more contracts or accepting strikes closer to the money.

Does selling a covered call to hit an income target affect my taxes?

In the US, the IRS generally treats covered call premiums as short-term capital gains, and selling certain in-the-money calls can suspend the holding period on your underlying shares, which may affect long-term capital gains treatment. In Canada, the CRA has specific rules on how option premiums adjust your cost base. Consult a qualified tax professional before building an income strategy around covered calls.

What monthly income yield is realistic from covered calls without taking on too much risk?

On large-cap liquid stocks like AAPL, MSFT, or SPY, out-of-the-money covered calls typically yield 1-3% per month under normal market conditions, based on historical premium levels tracked by the CBOE. Yields above 4-5% per month almost always come with elevated implied volatility, meaning the underlying stock is moving more and assignment or large drawdowns are more likely. The OIC recommends that retail traders understand the risk-reward trade-off before chasing high-yield results in a screener.