How to Screen for Covered Calls on Thinkorswim Using the Scan Tab

The Short Answer: Where to Start in Thinkorswim

To screen for covered calls on thinkorswim, open the platform, click the Scan tab at the top, then select Stock Hacker. From there you add stock-level filters (price, volume, implied volatility) and option-level filters (delta, days to expiration, bid price) to build a list of candidates that match your income target. The whole setup takes about ten minutes once you know which filters to use.

This guide walks you through every step, shows you a real worked example using Apple (AAPL), and flags the risks you need to understand before you sell a single call.

Why Use the Scan Tab Instead of Browsing Manually?

Manually flipping through charts to find a good covered call setup wastes time and introduces bias — you tend to look at the same five tickers you already know. The thinkorswim Scan tab queries the entire US equity universe in seconds and surfaces only the names that clear your specific hurdles.

For covered-call sellers, the three things that matter most are: (1) enough option premium to be worth the trade, (2) a strike price that sits far enough out of the money that you are not constantly getting called away, and (3) enough stock liquidity that you can exit cleanly if something goes wrong. The scan filters map directly onto those three goals.

The Options Industry Council (OIC) notes that covered calls work best on stocks you are comfortable holding long-term, because the downside risk is the stock falling — not the option itself. Keep that in mind as you build your filter list: a high premium on a volatile small-cap may look attractive but carries real downside exposure.

Step-by-Step: Building Your Covered Call Scan

Follow these steps inside thinkorswim desktop (the web version has the same layout):

**Step 1 — Open Stock Hacker.** Click Scan at the top navigation bar, then choose Stock Hacker from the left panel. You will see a blank filter workspace.

**Step 2 — Add a stock price filter.** Click Add filter > Stock > Last. Set the range to $20–$500. This keeps you in names where 100 shares (one contract lot) is affordable and where options markets are typically active.

**Step 3 — Add an average daily volume filter.** Click Add filter > Stock > Volume. Set minimum average daily volume to 1,000,000 shares. Thin stocks have wide bid-ask spreads on their options, which eats your premium before you even open the trade.

**Step 4 — Add an Implied Volatility Percentile filter.** Click Add filter > Study > choose ImpliedVolatility from the studies list. Set the minimum to 30 and the maximum to 70. Below 30, premiums are often too thin to bother. Above 70, the market is pricing in serious event risk — earnings, litigation, macro shock — and you can get hurt badly on the stock side.

**Step 5 — Switch to the Options filter panel.** Below the stock filters, click Add filter > Options. Now you are filtering on the actual option contracts.

**Step 6 — Set Days to Expiration (DTE).** Choose Expiration > Days to Expiration. Set the range to 21–45 days. This is the sweet spot where theta decay accelerates without locking up your shares for months. CBOE research on short-option strategies consistently points to this window as the highest theta-per-day zone.

**Step 7 — Set Delta.** Choose Greeks > Delta. Set the range to 0.20–0.35. A delta of 0.25 means the market implies roughly a 25% chance the call finishes in the money. You keep the premium if it expires worthless, and you still participate in moderate upside before the strike.

**Step 8 — Set a minimum Bid price.** Choose Option > Bid. Set the minimum to $0.50. Anything below that and commissions plus the spread make the trade economically marginal for most retail accounts.

**Step 9 — Run the scan.** Click Scan in the bottom right. Thinkorswim returns a list of stocks that clear every filter simultaneously. Sort by Implied Volatility descending to see the highest-premium candidates first.

Worked Example: Screening and Placing a Trade on AAPL

Say the scan returns Apple (AAPL) trading at $213.50. You already own 100 shares. Here is how you evaluate the result.

**Identify the strike.** With delta set to 0.25–0.35, the scan might surface the $220 call expiring in 35 days. That strike is about 3% out of the money from the current price of $213.50.

**Check the premium.** The $220 call has a bid of $2.85 and an ask of $2.90. You would sell at the bid or try to get $2.87 mid-market. On 100 shares that is $285–$287 in gross premium collected.

**Calculate your annualized yield.** $285 premium ÷ $21,350 stock value × (365 ÷ 35 days) = approximately 11.1% annualized. That is a meaningful income boost on a stock you planned to hold anyway.

**Understand your cap.** If AAPL runs to $230 before expiration, your shares get called away at $220. You collect the $220 strike plus the $2.85 premium — a total effective sale price of $222.85 — but you miss the gain from $222.85 to $230. That is the trade-off covered-call sellers accept every time.

**Understand your floor.** If AAPL drops to $190, you still own the shares at a loss. The $285 premium offsets only $2.85 of that decline. The option does not protect you from a large stock drawdown. FINRA reminds retail investors that covered calls reduce cost basis slightly but do not function as a hedge against significant downside moves.

**Place the order.** In thinkorswim, right-click AAPL in your scan results, choose Sell > Single, select the $220 call at your target expiration, and enter a limit order at $2.87. Use a Good Till Cancelled (GTC) order so it works even if you step away.

What Are the Real Risks of This Strategy?

Covered calls are one of the lower-risk options strategies — the SEC classifies them as a Level 1 options approval strategy at most brokers — but lower risk does not mean no risk.

**Stock risk is your biggest exposure.** If you sell a covered call on a stock that then drops 20%, the $285 premium you collected barely moves the needle. You are long the stock, and the stock can go to zero. Only sell covered calls on stocks you genuinely want to own at current prices.

**Assignment risk is real.** If AAPL closes above $220 at expiration, your broker will automatically sell your 100 shares at $220. If you did not want to sell, you need to buy back the call before expiration — at a cost. Early assignment before expiration is less common on standard American-style equity options but can happen if the call goes deep in the money, especially around ex-dividend dates. The OIC has detailed guidance on early assignment scenarios.

**Tax consequences matter.** In the US, the IRS treats premiums from covered calls as short-term capital gains in most cases, regardless of how long you have held the stock. Selling a covered call can also suspend the holding period on your shares, potentially converting a long-term gain into a short-term gain if the call is in the money. Consult a tax professional and review IRS Publication 550 before trading. Canadian investors should check CRA guidance on option writing, as the tax treatment differs — premiums may be treated as capital gains or income depending on your trading frequency and intent.

**Liquidity risk on exit.** If you need to close the position early, a wide bid-ask spread can cost you significantly. That is why the volume filter in Step 3 matters — stick to liquid names.

Saving and Reusing Your Scan

Once your filters are set, click the floppy-disk icon (Save Scan Query) in the top right of the Stock Hacker panel. Give it a name like 'CC Income 21-45 DTE' and save it. Next time you open thinkorswim, click Load Scan Query and your entire filter set reloads in one click.

Run the scan at least once a week, ideally on Monday morning before the market opens. Option premiums shift with implied volatility, so a stock that looked attractive last week may have seen its IV collapse after an earnings release, making the premium too thin to justify the trade.

You can also create a watchlist directly from scan results. Highlight the tickers you like, right-click, and choose Add to Watchlist. This lets you monitor them in the Charts tab without re-running the scan every time.

Quick Checklist Before You Sell Any Call

Use this five-point check on every candidate the scan surfaces:

1. **Do I own 100 shares (or a multiple)?** You cannot sell a covered call without owning the underlying shares. Selling without the shares is a naked call — a completely different and far riskier strategy that requires higher margin approval.

2. **Am I comfortable selling these shares at the strike price?** If the answer is no, move to a higher strike or skip the trade.

3. **Is there an earnings announcement inside my expiration window?** Check the Earnings tab in thinkorswim. Earnings can cause massive overnight gaps that blow past your strike or crater the stock. Many experienced covered-call sellers avoid holding through earnings entirely.

4. **Is the bid-ask spread on the option less than 10% of the mid-price?** A $2.87 mid with a $0.50 spread is too wide. A $2.87 mid with a $0.05 spread is fine.

5. **Does the annualized yield clear my personal hurdle rate?** If you can get 8–12% annualized on a stock you like, that is a reasonable income target. Chasing 30%+ annualized yields usually means you are taking on earnings risk or selling on a highly volatile name where the stock can move against you fast.

Can I use the thinkorswim scan tab on the web version, or do I need the desktop app?

The Scan tab is available on both the thinkorswim desktop platform and the thinkorswim web platform at schwab.com. The filter options and layout are nearly identical across both versions. Most traders find the desktop app slightly faster when running large scans across the full stock universe.

What delta should I use when screening covered calls for income?

A delta range of 0.20 to 0.35 is the most common starting point for income-focused covered-call sellers. A delta of 0.25 implies roughly a 25% probability the call finishes in the money, meaning you keep the full premium about 75% of the time at expiration. Higher delta means more premium but a greater chance your shares get called away.

How do I avoid getting assigned early on my covered call?

Early assignment on American-style equity options is most likely when the call is deep in the money and the stock is about to go ex-dividend. Monitor your positions around ex-dividend dates and consider closing or rolling the call before that date if it is in the money. The Options Industry Council (OIC) publishes free educational material on assignment risk that covers this scenario in detail.

Does selling covered calls affect my long-term capital gains holding period on the stock?

Yes, it can. The IRS has rules under Publication 550 that can suspend your holding period on the underlying shares when you sell an in-the-money covered call, potentially converting a long-term gain into a short-term gain if the shares are later called away. Canadian investors should review CRA guidance separately, as the tax treatment of option premiums depends on trading frequency and intent. Always consult a qualified tax professional before trading.

What minimum stock price and volume should I filter for in my covered call scan?

A stock price floor of $20 keeps you in names where the option premium is meaningful in dollar terms, and a ceiling around $500 keeps the 100-share lot affordable for most retail accounts. Setting average daily volume above 1,000,000 shares helps ensure the options market on that stock has tight bid-ask spreads, which directly improves the net premium you collect.

How often should I re-run my thinkorswim covered call scan?

Running the scan once a week — Monday morning before the open is a common routine — is enough for most retail covered-call sellers targeting 21-to-45-day expirations. Implied volatility levels shift after earnings releases and macro events, so a ticker that looked attractive last week may no longer meet your premium threshold. Saving your scan query in thinkorswim lets you reload all your filters in one click each week.