How to Use a Covered Call Screener to Find the Highest Premium Per Share Per Month

The Short Answer: What to Filter For First

To find covered calls that pay the most premium per share per month, sort your screener by annualized premium yield — that is, the option premium divided by the stock price, scaled to 12 months — then filter for options with 20–45 days to expiration, a delta between 0.25 and 0.40, and open interest above 500 contracts. That single workflow cuts a universe of thousands of options down to a short list of realistic, liquid candidates you can act on the same day.

The key word is "realistic." Raw premium size means nothing if the option is illiquid, the spread is wide, or the stock is so volatile that assignment wipes out your gain. The screener is just the starting gate. The sections below walk you through every filter, in order, so you build a list that actually holds up.

Why Premium Per Share Per Month Is the Right Metric

Most screeners show you total premium in dollars or annualized yield as a percentage. Both are useful, but neither tells you what you actually pocket on a per-share basis each month. A $3.00 premium on a $400 stock is a 0.75% monthly yield. A $1.50 premium on a $50 stock is a 3.0% monthly yield. The second trade pays less in raw dollars but far more relative to the capital you tied up.

The formula is simple:

Monthly premium yield = (Option bid price ÷ Stock price) × (30 ÷ Days to expiration) × 100

Example using NVDA: Suppose NVDA is trading at $875. The 30-day $900 call (out-of-the-money by about 2.9%) has a bid of $18.50. Plug in the numbers: ($18.50 ÷ $875) × (30 ÷ 30) × 100 = 2.11% monthly yield, or roughly $18.50 per share per month. Compare that to AAPL at $185, where the 30-day $190 call bids at $2.10: ($2.10 ÷ $185) × (30 ÷ 30) × 100 = 1.14% monthly yield, or $2.10 per share per month. NVDA pays more on both measures — but it also carries more risk, which we cover below.

Always use the bid price, not the midpoint, when calculating realistic income. The bid is what a market maker will actually pay you when you sell to open. The Options Industry Council (OIC) recommends using the bid as your conservative baseline for income projections.

How to Set Up Your Screener Step by Step

Most retail platforms — thinkorswim, Tastyworks, Interactive Brokers, and others — include a built-in options screener. Third-party tools like Barchart and Market Chameleon also work well. Here is the exact filter stack to use:

1. Expiration window: 20–45 days to expiration (DTE). This range captures the steepest part of theta decay, where time value erodes fastest in your favor. CBOE data consistently shows that options in this window lose time value at the highest daily rate relative to their remaining premium.

2. Moneyness: Out-of-the-money (OTM) by 2–8%. This gives you a buffer before the stock reaches your strike and gets called away. Tighter OTM means more premium; wider OTM means more upside room. Start at 5% OTM and adjust based on your outlook.

3. Delta: 0.25–0.40. Delta is a rough proxy for the probability that the option expires in-the-money. A delta of 0.30 means roughly a 30% chance of assignment. The OIC defines delta as the rate of change of the option price relative to a $1 move in the underlying — but for covered-call sellers, it doubles as a quick assignment-probability estimate.

4. Open interest: 500 contracts minimum. Low open interest means thin markets, wide spreads, and difficulty exiting early. FINRA Rule 2360 governs options account requirements, and while it does not set a liquidity floor, FINRA guidance consistently emphasizes that retail investors should trade only liquid options to avoid being trapped.

5. Implied volatility rank (IVR): 30 or higher. IVR compares current implied volatility to its 52-week range. An IVR above 30 means options are priced above their historical average — you are selling expensive premium, not cheap premium.

6. Sort column: Monthly premium yield (%). Once the filters are applied, sort descending by this column. The top results are your candidates.

Run this screen during the first hour of the trading day, after the opening volatility spike settles, typically 30–60 minutes after the open. Premiums quoted at 9:31 a.m. ET can look very different by 10:30 a.m.

A Worked Example: Comparing Three Real Candidates

Let's say your screener returns three candidates after applying the filters above. Here is how to compare them side by side using round numbers representative of mid-2024 market conditions.

Candidate 1 — NVDA at $875, 30-DTE $920 call, bid $16.00 Monthly yield: ($16.00 ÷ $875) × 100 = 1.83% Delta: 0.28 IVR: 52 Open interest: 18,400 contracts

Candidate 2 — MSFT at $415, 30-DTE $430 call, bid $5.80 Monthly yield: ($5.80 ÷ $415) × 100 = 1.40% Delta: 0.30 IVR: 38 Open interest: 9,200 contracts

Candidate 3 — SPY at $530, 30-DTE $545 call, bid $4.90 Monthly yield: ($4.90 ÷ $530) × 100 = 0.92% Delta: 0.27 IVR: 31 Open interest: 142,000 contracts

NVDA wins on raw yield and IVR. SPY wins on liquidity and stability. MSFT sits in the middle on all three. Which is best? That depends on what you already own. Covered calls require you to hold 100 shares of the underlying per contract. If you own NVDA, selling the $920 call captures the highest monthly income. If you own SPY, you accept lower yield in exchange for lower volatility and near-zero assignment drama.

The screener does not tell you which stock to buy. It tells you which options are richest relative to the stock price, given the shares you already hold.

The Risks You Need to See Before You Trade

High premium almost always signals high implied volatility, and high implied volatility exists because the market expects large price swings. That is not a coincidence — it is the mechanism. When you see a 3% monthly yield, ask yourself: why is the market paying that much? Usually the answer is an upcoming earnings report, a macro event, or a stock that has been moving 4–6% per week.

Three specific risks to weigh before you sell:

Assignment risk: If the stock closes above your strike at expiration, your shares get called away at the strike price. You keep the premium, but you miss any gain above the strike. The SEC's investor education materials note that covered-call writers cap their upside at the strike price plus the premium received. On a fast-moving name like NVDA, a 5% OTM strike can become in-the-money within a week.

Downside risk: The premium you collect does not protect you from a large drop in the stock. If NVDA falls from $875 to $780, your $16.00 premium offsets only $16 of a $95 loss. Covered calls reduce cost basis slightly; they do not hedge against serious drawdowns.

Earnings and event risk: Implied volatility — and therefore premium — spikes before earnings announcements. Selling a covered call into earnings looks attractive on the screener but exposes you to a large gap move in either direction. Many experienced covered-call traders skip the cycle that straddles an earnings date entirely, or they close the position before the announcement.

Tax treatment also matters. In the US, the IRS treats premiums received from selling covered calls as short-term capital gains in most cases, regardless of how long you have held the stock. Selling a deep in-the-money call can also suspend the holding period on your shares under IRS rules, potentially converting a long-term gain into a short-term gain if the stock is called away. Canadian investors should note that the CRA applies similar logic under its income versus capital-gain rules for option premiums. Consult a tax professional before trading covered calls in a taxable account.

What to Do After the Screener Gives You a List

Your screener output is a ranked shortlist, not a buy signal. Before you place the order, run through this four-point check:

1. Check the earnings calendar. If earnings fall within your expiration window, either skip the trade or close it before the announcement date. Free earnings calendars are available on CBOE's website and most broker platforms.

2. Verify the bid-ask spread. A spread wider than $0.20 on a sub-$5 option, or wider than $0.50 on a sub-$20 option, signals poor liquidity. Use a limit order at the midpoint and be willing to walk away if you do not get filled within a few cents.

3. Confirm you own 100 shares per contract. Covered calls require share ownership. Selling a call without owning the shares is a naked call — a very different, high-risk strategy that requires a higher options approval level, as defined by FINRA and most broker margin agreements.

4. Set your exit plan before you enter. Decide in advance whether you will buy back the call if it loses 50% of its value (locking in half the premium early and freeing up the position), or if you will hold to expiration. Having a rule removes emotion from the decision.

Building a Monthly Screening Routine That Compounds Over Time

The traders who consistently earn the most from covered calls are not the ones who find the single highest-yielding trade. They are the ones who run the same disciplined screen every month, execute on liquid candidates, manage positions actively, and reinvest premiums systematically.

A practical routine: Run your screener on the Monday or Tuesday of the week that contains the 30-DTE mark for the next monthly expiration cycle. Standard monthly options expire on the third Friday of each month, so count back 30 days from that date to find your ideal entry window. Screen for 20–45 DTE, apply the filters above, compare the top five candidates against your current holdings, and sell one to three calls that week.

Track every trade in a simple spreadsheet: date, ticker, strike, premium received, expiration, outcome (expired worthless, bought back early, or assigned). After six months, your own data will tell you which stocks and which IVR ranges produce the best risk-adjusted income for your specific portfolio. No screener can give you that — only your own trade log can.

What is the best free covered call screener for retail investors?

Barchart.com and Market Chameleon both offer free covered-call screeners with filters for yield, delta, and open interest. Most major brokers — including thinkorswim and Interactive Brokers — also include built-in options screeners at no extra cost. Start with your broker's native tool before paying for a third-party subscription.

How much premium per share per month is considered good for a covered call?

A monthly yield of 1–3% of the stock price is a common target range for covered-call sellers balancing income against assignment risk. Below 1% often means implied volatility is too low to justify the trade. Above 3% usually signals elevated event risk, such as an upcoming earnings report, that could cause a large price swing.

Does selling covered calls count as income for tax purposes?

In the US, the IRS generally treats premiums from selling covered calls as short-term capital gains, not ordinary income, though the specific treatment depends on the strike price and holding period of your shares. Selling a deep in-the-money call can suspend your stock's holding period under IRS rules, which may affect whether a gain is long-term or short-term. Canadian investors should check CRA guidance, as option premiums can be treated as either income or capital depending on the circumstances. Always consult a qualified tax professional.

What delta should I use when screening for covered calls?

A delta between 0.25 and 0.40 is the most common range for covered-call sellers who want meaningful premium without a high probability of assignment. Lower delta (0.15–0.25) means less premium but more room for the stock to run before getting called away. The OIC describes delta as both a sensitivity measure and a rough probability estimate for expiring in-the-money.

Can I sell covered calls on ETFs like SPY or QQQ?

Yes, ETFs like SPY and QQQ are among the most liquid options markets in the world, with tight bid-ask spreads and enormous open interest. The monthly yields are lower than on individual stocks because ETF volatility is lower, but the consistency and ease of execution make them popular with income-focused traders. CBOE lists SPY options as one of the highest-volume contracts traded daily.

What happens if I sell a covered call and the stock gets called away?

If your stock closes above the strike price at expiration, the shares are sold at the strike price through the assignment process — you keep the premium and receive the strike price per share, but you no longer own the stock. You miss any gain above the strike, which is the defined trade-off of the covered-call strategy. The SEC notes that covered-call writers accept capped upside in exchange for the premium received.