How to Find Covered Calls on Stocks You Already Own (Step-by-Step)

The Short Answer: Three Steps to Your First Trade

To find covered calls on stocks you already own, open your brokerage's option chain for that stock, pick a strike price above the current share price, choose an expiration date 2–6 weeks out, and sell one call contract per 100 shares you hold. That single action turns idle shares into a premium-generating position. The rest of this guide shows you exactly how to do each step — and what to watch out for.

What You Need Before You Start

You need three things in place before you sell a single call.

First, you need at least 100 shares of the stock. One standard options contract covers exactly 100 shares. If you own 250 shares of AAPL, you can sell two contracts and still have 50 shares uncovered. The Options Industry Council (OIC) confirms this 100-share-per-contract standard applies to all US-listed equity options.

Second, your brokerage account must be approved for options trading at Level 1 or Level 2. Covered calls are the most basic options strategy, so most brokers approve them quickly. FINRA requires brokers to assess your experience and financial situation before granting options approval — expect a short online questionnaire.

Third, you need a stock that has listed options. Not every stock does. Large-cap, liquid names like AAPL, MSFT, NVDA, and SPY all have deep, active option chains. Thinly traded small-caps may have wide bid-ask spreads that eat your premium. Stick to stocks with open interest above 500 contracts at your target strike.

How to Read an Option Chain for Your Stock

An option chain is a table showing every available strike price and expiration date for a stock's options. Log into your brokerage, pull up the stock, and click 'Options' or 'Option Chain.' You will see two sides: calls on the left (or top), puts on the right (or bottom).

Focus on the call side. The key columns are:

- **Strike price** — the price at which you agree to sell your shares if assigned. - **Bid / Ask** — the bid is what a buyer will pay you right now. Always sell at or near the bid when you enter a limit order. - **Last price** — the most recent trade. Use this as a reference, not as your fill price. - **Implied Volatility (IV)** — expressed as a percentage. Higher IV means higher premium. CBOE publishes the VIX as a broad market IV benchmark; individual stocks have their own IV. - **Delta** — a number between 0 and 1. A delta of 0.20 means the option has roughly a 20% chance of expiring in-the-money. Most income-focused covered-call sellers target deltas between 0.20 and 0.35. - **Open Interest** — total open contracts. Higher is better for liquidity.

Once you understand these columns, finding a good call to sell takes about five minutes.

Worked Example: Selling a Covered Call on AAPL

Let's say you own 100 shares of Apple (AAPL) purchased at $180. The stock is currently trading at $213.50.

You open the option chain and look at calls expiring in 30 days. You want a strike that is out-of-the-money (OTM) — above the current price — so you keep upside room before your shares get called away.

You spot the $220 strike call with a bid of $2.85 and an ask of $2.95. Delta is 0.28. Open interest is 4,200 contracts — plenty of liquidity.

You sell 1 contract (covering your 100 shares) at a limit price of $2.90, splitting the bid-ask spread. Your brokerage fills the order. You immediately collect $290 in premium ($2.90 × 100 shares), minus commissions.

**What happens at expiration?**

- If AAPL stays below $220: The call expires worthless. You keep the $290 and your 100 shares. You can sell another call next month. - If AAPL closes above $220: Your shares are called away at $220. You sell at $220 even if the stock is at $225. Your total gain on the shares is $220 − $180 = $40 per share ($4,000) plus the $290 premium = $4,290 total. You simply no longer own the shares.

**Annualized return check:** $290 premium on a $21,350 position over 30 days = 1.36% for the month, or roughly 16.3% annualized if you repeat it every month. That is not guaranteed — it depends on IV staying similar — but it illustrates why covered calls attract income-focused investors.

How to Use Your Brokerage's Screener to Find the Best Strike

Most major brokerages — TD Ameritrade/Schwab, Fidelity, E*TRADE, Interactive Brokers, and others — have built-in covered-call screeners or 'covered call finders.' Here is how to use them effectively.

**Step 1 — Filter by stocks you own.** Some platforms let you import your portfolio directly. Others require you to enter tickers manually. Start with your largest positions first; they generate the most premium in dollar terms.

**Step 2 — Set your delta range.** Input 0.20–0.35 delta to screen for OTM calls that balance premium income against the risk of assignment. A delta of 0.30 means roughly a 30% probability the option finishes in-the-money, per OIC educational materials.

**Step 3 — Set your expiration window.** Filter for 21–45 days to expiration (DTE). Options lose time value fastest in the final 30 days — a concept called theta decay. Selling in this window captures that accelerated decay.

**Step 4 — Sort by annualized premium yield.** Most screeners calculate this automatically. Look for calls yielding 1%–3% of the stock's current price per month. Anything above 4% per month usually signals elevated risk (earnings, FDA decisions, etc.) — avoid those unless you understand the catalyst.

**Step 5 — Check the bid-ask spread.** A spread wider than $0.15 on a $2.00 option is a red flag. Wide spreads mean poor liquidity and slippage that erodes your income.

For Canadian investors: the same process applies on platforms like Questrade or TD Direct Investing. The CRA treats covered-call premiums as capital gains or income depending on your trading frequency and intent — consult a tax professional and review CRA's Interpretation Bulletin IT-479R for guidance.

Real Risks You Should Not Skip Over

Covered calls are often marketed as 'safe' or 'conservative.' They are lower-risk than buying naked calls, but they carry real risks that deserve honest attention.

**Capped upside.** If AAPL jumps from $213.50 to $235 before expiration, you still sell at $220. You miss $15 per share of gains. Over a strong bull run, this can significantly underperform simply holding the stock.

**You still own the downside.** If AAPL drops to $185, you lose $28.50 per share on the stock. The $2.90 premium you collected offsets only a small portion of that loss. Covered calls do not protect you from a serious decline — they only reduce your cost basis slightly.

**Assignment can happen early.** American-style options (standard for US equity options) can be exercised any time before expiration, not just at expiry. Early assignment is rare but more likely around ex-dividend dates. The SEC's investor education materials note that option holders may exercise early to capture a dividend. If your stock goes ex-dividend before expiration, watch for this.

**Tax consequences.** In the US, the IRS treats covered-call premiums as short-term capital gains in most cases. Selling a deep ITM call can also affect the holding period of your shares, potentially converting a long-term gain into a short-term one. IRS Publication 550 covers this in detail. In Canada, the CRA's treatment depends on whether you are considered a trader or investor — get qualified advice before your first trade.

**Earnings and events.** IV spikes before earnings reports, making premiums look attractive. But the stock can move violently in either direction. Many experienced covered-call sellers avoid holding short calls through earnings entirely.

A Simple Checklist Before You Hit 'Sell'

Run through this list every time you are about to sell a covered call.

1. Do I own at least 100 shares of this stock? ✓ 2. Is there an earnings report or major event before expiration? If yes, reconsider. ✓ 3. Is the ex-dividend date before expiration? If yes, check for early assignment risk. ✓ 4. Is open interest at my target strike above 500 contracts? ✓ 5. Is the bid-ask spread $0.15 or less per dollar of premium? ✓ 6. Am I comfortable selling my shares at this strike price if assigned? ✓ 7. Have I calculated the annualized yield and confirmed it is realistic (1%–3% per month)? ✓ 8. Have I set a limit order at or near the bid — not a market order? ✓

If you can check every box, you are ready to execute. If any box fails, adjust your strike, expiration, or wait for a better setup.

How do I know if my stock has options available to sell?

Search the stock's ticker in your brokerage platform and look for an 'Options' tab or 'Option Chain' link. If no chain appears, the stock does not have listed options. Liquid large-cap stocks like AAPL, MSFT, and SPY always have options; many small-cap stocks do not.

What strike price should I choose for a covered call on a stock I already own?

Most income-focused sellers choose an out-of-the-money (OTM) strike with a delta between 0.20 and 0.35, which sits roughly 3%–8% above the current stock price. This gives you some upside room before assignment while still collecting meaningful premium. The further OTM you go, the lower the premium but the less chance your shares get called away.

Can I sell a covered call if I bought my shares recently and have a big unrealized gain?

Yes, but be aware of the tax implications before you do. The IRS rules in Publication 550 state that selling a deep in-the-money call can suspend or reset the holding period on your shares, potentially turning a long-term capital gain into a short-term one. Stick to OTM calls to reduce this risk, and consult a tax advisor if your gain is large.

What happens if my covered call gets assigned before expiration?

Early assignment means the option buyer exercised their right to buy your shares at the strike price before the expiration date. You will sell your 100 shares at the strike price and keep the premium you already collected. This is most likely to happen just before an ex-dividend date, so check that date when you sell any call.

How much money can I realistically make selling covered calls every month?

On a liquid large-cap stock with moderate implied volatility, a 30-delta OTM call typically generates 1%–2% of the stock's value per month in premium. On a $20,000 position that works out to $200–$400 per month before commissions and taxes. Returns vary with market volatility — higher IV environments produce higher premiums, as tracked by the CBOE VIX index.

Do I need a special brokerage account to sell covered calls in Canada?

You need an options-approved account with a Canadian broker such as Questrade, TD Direct Investing, or Interactive Brokers Canada. Most brokers require you to complete an options knowledge assessment before granting approval. The CRA treats covered-call premiums differently depending on your trading activity, so review CRA Interpretation Bulletin IT-479R or speak with a Canadian tax professional.