How to Screen for Covered Calls on Interactive Brokers: A Step-by-Step Setup for Income Investors

The Short Answer: Yes, IBKR Has a Built-In Covered Call Screener

Interactive Brokers lets you screen for covered call opportunities directly inside Trader Workstation (TWS) and the IBKR mobile app using the Options Scanner and the OptionTrader chain view. You filter by implied volatility, delta, days to expiration, and open interest — then sort by premium yield against your cost basis. No third-party tool required to get started.

This guide walks you through the exact setup, explains which filters matter most for income-focused sellers, and shows a real worked example using Apple (AAPL) so you can replicate the process on any stock you already own.

What Makes a Good Covered Call Candidate?

Before you touch the screener, you need a clear picture of what you are looking for. A covered call worth selling has four things going for it:

1. You already own 100 shares (or multiples of 100) of the underlying stock. Selling a call without owning the shares is a naked call — a completely different and far riskier strategy. FINRA Rule 4210 requires your broker to hold margin against uncovered short calls, and IBKR will block the trade if your account is not approved for that level.

2. The stock has enough implied volatility (IV) to generate meaningful premium. Stocks with IV below 20% often produce premiums too thin to justify the capped upside.

3. The option has enough open interest and volume that the bid-ask spread is tight. A wide spread eats your income before you collect a cent.

4. The strike is at a price you would be comfortable selling your shares at. If the stock closes above your strike at expiration, your shares get called away. That is not a loss — but it is a real outcome you must plan for.

Setting Up the Options Scanner in TWS Step by Step

Open TWS and go to the top menu: New Window → Analytical Tools → Options Scanner. If you are on IBKR Desktop (the newer interface), find it under Tools → Options Scanner.

Step 1 — Choose your scan universe. Set the instrument type to 'Options' and the option type to 'Call.' Under the underlying filter, you can enter a specific ticker or scan a broad index like the S&P 500 component list.

Step 2 — Set your expiration window. For weekly income, filter for 7–21 days to expiration (DTE). For monthly income, use 21–45 DTE. The 30–45 DTE range is widely cited by the Options Industry Council (OIC) as the sweet spot where time decay (theta) accelerates without the premium being too thin.

Step 3 — Filter by delta. Set the delta range to 0.20–0.35. This targets out-of-the-money calls that have roughly a 20–35% chance of finishing in the money at expiration. Higher delta means more premium but higher assignment risk. Lower delta means safer but thinner income.

Step 4 — Set a minimum open interest. Use 500 contracts as a floor. This filters out illiquid options where you may not get filled at the midpoint price.

Step 5 — Sort by annualized premium yield. TWS does not calculate this automatically, but you can add a custom column. Divide the option's midpoint price by the stock's current price, then multiply by (365 / DTE). A result above 10% annualized is a reasonable starting target for moderately volatile stocks.

Step 6 — Save the scan as a template. Click the disk icon in the scanner toolbar. Name it something like 'CC Income 30DTE.' You can reload it in seconds on any future session.

Worked Example: Selling a Covered Call on AAPL

Let's say you own 100 shares of Apple (AAPL) purchased at $172 per share. AAPL is currently trading at $213.50. You open OptionTrader in TWS (right-click AAPL on your portfolio page → Option Trader).

You filter the call chain for expirations roughly 35 days out. You spot the $220 strike call expiring in 35 days with a bid of $2.85 and an ask of $2.95. The midpoint is $2.90. Delta on this strike is 0.28.

Premium collected if filled at midpoint: $2.90 × 100 shares = $290 before commissions.

Annualized yield on current stock price: ($2.90 / $213.50) × (365 / 35) = 1.36% × 10.43 = approximately 14.2% annualized.

If AAPL stays below $220 at expiration, you keep the $290 and the shares. Your effective cost basis drops to $172 − $2.90 = $169.10 per share (ignoring taxes).

If AAPL closes above $220 at expiration, your shares are called away at $220. You collect $220 − $172 = $48 per share in capital gain plus the $2.90 premium, for a total gain of $50.90 per share on your original cost. That is a strong outcome — you just do not participate in any rally above $220.

IBKR charges $0.65 per contract for most retail accounts, so your net premium is $290 − $0.65 = $289.35 on this one-contract trade. Always factor commissions into your yield calculation.

Risks You Need to Understand Before You Sell

Covered calls are one of the most conservative option strategies, but they are not risk-free. Here are the three risks that matter most:

Downside risk is not eliminated. If AAPL drops from $213.50 to $185, your $2.90 premium offsets only $2.90 of that $28.50 loss. The covered call reduces your cost basis slightly but does not protect you from a large drop. You still own the stock.

Capped upside is a real cost. If AAPL jumps to $235 after you sold the $220 call, you miss $15 per share of that move. Over a long bull run, consistently selling calls on a fast-growing stock can meaningfully reduce your total return compared to just holding.

Early assignment on American-style options. IBKR trades American-style equity options, which means the buyer can exercise at any time before expiration. Early assignment is rare on out-of-the-money calls, but it can happen around ex-dividend dates. The OIC notes that early exercise is most likely when the option is deep in the money and the dividend is large relative to remaining time value. Check the dividend calendar before selling.

Tax treatment matters. In the US, premiums received from selling covered calls are generally taxed as short-term capital gains in the year they are received, per IRS Publication 550. If your call is assigned, the premium adjusts your proceeds from the stock sale. In Canada, the CRA treats covered call premiums as capital gains or income depending on your trading frequency and intent — consult a tax professional if you are unsure which applies to you.

Using IBKR's Option Chain View for a Faster Workflow

The Options Scanner is powerful for broad searches, but once you know which stocks you want to write calls on, the Option Chain view inside OptionTrader is faster for day-to-day execution.

Right-click any stock in your portfolio and select Option Trader. Set the expiration tab to your target month. Add the columns: Delta, Implied Volatility, Open Interest, Volume, and Bid/Ask. Sort by delta descending to find the 0.25–0.35 delta range quickly.

IBKR also offers the Probability Lab tool (New Window → Probability Lab), which shows the market-implied probability distribution for a stock at expiration. This is useful for visualizing how likely your strike is to stay out of the money. A $220 strike with a 28% delta implies roughly a 28% chance of assignment — or a 72% chance you keep the shares and the full premium.

For Canadian IBKR users, the same TWS tools are available. Note that options on Canadian-listed stocks (TSX) are traded on the Montreal Exchange (MX) and have different liquidity profiles than US-listed options. Stick to US-listed options on familiar names like AAPL, MSFT, or SPY if you are just starting out, regardless of where your account is domiciled.

Building a Repeatable Monthly Screening Routine

Consistency beats perfection in covered call writing. Here is a simple weekly routine you can run in under 20 minutes:

Every Monday morning, open your saved TWS scanner template. Run it against your current holdings first — check whether any existing covered calls need to be rolled, closed early, or left to expire. A call trading at 10–15% of its original premium is often worth buying back and reselling at a later expiration to collect more premium.

Next, run the broader scan on your watchlist. Look for stocks where IV rank (IVR) is above 30. IVR compares current IV to the past 52-week range. High IVR means you are selling premium when it is relatively expensive — a core principle of systematic covered call writing.

Finally, size your positions. Most income-focused retail traders keep any single covered call position to no more than 10–15% of their total portfolio. Concentration in one name amplifies both the income and the downside risk.

IBKR's Risk Navigator (New Window → Risk Navigator) gives you a portfolio-level view of your net delta, theta, and vega exposure. Review it after adding any new covered call to make sure your overall book still matches your income goals and risk tolerance.

Does Interactive Brokers have a built-in covered call screener?

Yes. TWS includes an Options Scanner under Analytical Tools that lets you filter calls by delta, implied volatility, days to expiration, and open interest. You can save your filter settings as a reusable template so you do not have to rebuild the scan each session.

What delta should I target when screening for covered calls?

Most income-focused covered call sellers target a delta between 0.20 and 0.35 on the call they sell. This range gives you a meaningful premium while keeping the probability of assignment around 20–35%. Higher delta means more income but a greater chance your shares get called away.

How many days to expiration is best for covered calls on IBKR?

The 30–45 day range is widely recommended by the Options Industry Council (OIC) because theta decay accelerates in that window, meaning you collect premium faster relative to the risk you are taking. Weekly options (7 DTE) can work but require more active management and generate higher transaction costs.

Can I get assigned early on a covered call sold through Interactive Brokers?

Yes. US equity options are American-style, so the buyer can exercise at any time before expiration. Early assignment is uncommon on out-of-the-money calls but is more likely around ex-dividend dates when the option is deep in the money. Always check the dividend calendar before selling a call.

How are covered call premiums taxed in the US and Canada?

In the US, the IRS generally treats premiums from selling covered calls as short-term capital gains in the year received, per IRS Publication 550. In Canada, the CRA may treat premiums as capital gains or income depending on your trading frequency and intent, so Canadian investors should consult a tax professional before starting a covered call program.

What minimum open interest should I require when screening covered calls?

A floor of 500 contracts of open interest is a practical starting point for retail traders. Low open interest usually means a wide bid-ask spread, which reduces the premium you actually collect when you sell. Higher open interest — 1,000 contracts or more — generally means tighter spreads and easier fills near the midpoint price.