How Much Money Can You Make Selling Covered Calls?

Options Strategy

Real numbers, no hype.

The short answer: somewhere between “beer money” and “quit your job money” — depending on your portfolio size, the stocks you pick, and how realistic your expectations are.

If you’ve been investing for a while, you’ve probably stumbled across covered calls and thought something like: “Wait, people are getting paid just to hold stocks they already own? What’s the catch?”

There’s always a catch. But in this case, it’s actually not that bad — once you understand the tradeoff.

I’ve been trading covered calls regularly for a while now, and I want to give you the honest version. Not the YouTube thumbnail version. The one that helps you decide if this strategy actually makes sense for your situation.

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What Is a Covered Call? (Quick Refresher)

If you already know this, skip ahead. But since options have their own language, let’s make sure we’re on the same page.

A covered call is when you:

1. Own at least 100 shares of a stock (the “covered” part — your shares cover the obligation)
2. Sell a call option against those shares
3. Collect a premium — cash, immediately, in your account

In exchange, you’re giving the buyer the right to purchase your shares at a set price (called the strike price) before the option expires.

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So How Much Can You Actually Make?

Let’s skip the vague percentages and look at real dollar examples across different portfolio sizes.

The Conservative Approach

The Moderate Approach

The Aggressive Approach

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What Determines How Much You Collect?

This is where knowing your stocks actually gives you an edge.

1. Implied Volatility (IV) — The Biggest Factor

Options are priced largely on how much the market expects a stock to move. This is called implied volatility, and it’s the engine behind premium sizes.

• Low-volatility stocks (think utilities, consumer staples): smaller premiums, more predictability
• High-volatility stocks (tech, biotech, meme stocks): bigger premiums, but the stock can also move hard against you

A stock that regularly swings 5–10% in a week will offer much juicier premiums than a slow-moving dividend stock. The market is pricing in that risk. Higher premium = higher chance something wild happens.

2. Strike Price — How Far Out You Go

You have a choice of how you sell the call, and it changes the income vs. upside tradeoff significantly.

• At-the-money (ATM) calls — Strike is right at the current stock price. You get the biggest premium but give up almost all upside.
• Out-of-the-money (OTM) calls — Strike is above the current price. Smaller premium, but you keep more upside if the stock runs.
• Deep OTM calls — Way above the current price. Tiny premium, but you’d need a big move to get assigned.

Most traders — myself included — target slightly out-of-the-money strikes that balance a decent premium with some room for the stock to grow.

3. Time to Expiration — Weekly vs. Monthly

Weekly options seem appealing because you can collect premium four times a month instead of once. But there are tradeoffs:

The sweet spot most covered call traders use is 30–45 days to expiration. You get meaningful time decay without babysitting the position every day.

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Real-World Example: What Covered Call Premiums Actually Look Like

Let me show you two real trades using live options data — a boring-stable stock vs. a high-volatility one — so you can see exactly how the numbers play out.

Both examples use the June 18, 2026 expiration (~30 days out from today), right in that sweet spot we talked about.

Example 1: Walmart (WMT) — The Steady Earner

The setup:

• WMT is trading at $134.08
• Strike price: $135 (less than 1% above current price — nearly at the money)
• Premium: $3.80 per share
• Implied Volatility: 30.21%

The math on 100 shares:

You collect $380 today, in cash, immediately. If Walmart stays below $135 by June 18, you keep the $380 and do it again in July. If it climbs above $135, your shares sell at $135 — you still keep the $380, you just miss anything above that price.

Walmart isn’t known for exploding higher overnight, which is exactly why this works well. You’re collecting “rent” on a stock that tends to move slowly and predictably.

The IV context: At 30.21% implied volatility, the market is pricing in moderate movement. That’s what’s generating a $3.80 premium on a $134 stock. Not huge, but steady.

Example 2: Palantir (PLTR) — The High-Premium, High-Risk Version

The setup:

• PLTR is trading at $135.50
• Strike price: $140 (about 3.3% above current price — slightly out of the money)
• Premium: $5.65 per share
• Implied Volatility: 47.84%

The math on 100 shares:

You collect $565 this month instead of $380 — nearly 50% more premium for a very similar dollar investment. That’s the appeal of high-volatility stocks.

But here’s the tradeoff hiding in that 47.84% IV number: the market is pricing in big potential moves. Palantir can swing 10–15% in a week on an earnings report, a government contract announcement, or just a shift in AI sentiment. That $5.65 premium is the market’s way of saying “anything could happen.”

Side-by-Side Comparison

What This Illustrates

The extra $185/month from PLTR vs. WMT isn’t free money — it’s compensation for accepting more volatility. The options market is very good at pricing this. When you see a fat premium, the market is essentially telling you: this stock moves a lot, and someone is paying you to take that risk.

Neither trade is wrong. They’re just different bets:

• WMT is the landlord collecting steady rent on a reliable tenant.
• PLTR is higher rent, but your tenant occasionally throws parties that end with broken windows.

Which one fits your portfolio depends on what you own, what you’re comfortable with, and whether you’d be okay holding either stock if it drops 20%.

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The Cost Nobody Talks About in the Highlight Reels

Here’s the scenario that trips up a lot of new covered call sellers:

You own 100 shares of a stock at $50. You sell a covered call with a $55 strike and collect $150 in premium ($1.50/share). Solid trade.

Then the stock announces blowout earnings and jumps to $75.

What happens?

• Your shares get called away at $55.
• You made $5/share on the stock + $1.50/share premium = $6.50 per share total.
• But without the covered call, you would have had $25/share in unrealized gains. You gave up $18.50/share of that potential by capping your exit at $55.

That’s opportunity cost — and it’s the real price of covered call income. You didn’t lose money; you made $6.50/share. You just left $18.50 on the table that you would have had otherwise.

This is why covered calls work best on stocks you’d be fine selling at the strike price, or stocks you don’t expect to rocket higher. You’re not sacrificing upside on a stock if you’re okay collecting steady premiums instead of swinging for a 10x.

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When Covered Calls Work Best (And When They Don’t)

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What Realistic Monthly Income Looks Like in Practice

Here’s how I’d frame this for someone starting out:

If you have $25,000 in a stock position and you’re generating 1.5% per month in covered call premiums, that’s roughly $375/month or $4,500/year.

That’s not replace-your-income money. But it’s a car payment, a few utility bills, extra cash flowing from shares you were already holding anyway.

Scale that to a $100,000 position at the same 1.5%, and you’re at $1,500/month. That starts to feel meaningful — especially since you still own the shares.

The traders generating $5,000–$10,000/month from covered calls? They’re working with large portfolios (often $300,000–$500,000+), have been doing this for years, and are actively managing multiple positions across different stocks. It’s real. It’s just not a shortcut.

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Frequently Asked Questions

Do I need to sell covered calls every month?

No. You choose when to open positions. If premiums are low or your stock is about to report earnings, sitting out a month is a completely valid move.

What if I don’t want my shares called away?

You can buy back the call option before expiration (called “closing the position”) — usually for less than you sold it for if the stock hasn’t moved much. It costs a little, but you keep your shares.

Can I lose money doing this?

You won’t lose money from the covered call itself — the premium is yours to keep. But the underlying stock can still fall. The premium provides a small cushion, not full protection.

What’s a good stock to start with?

Most beginners start with stocks they already own — something they understand and are comfortable holding long term. Avoid starting with ultra-volatile names until you’ve done a few trades and understand how assignment works.

What does “getting assigned” mean?

Assignment is when the buyer of your call option exercises their right to buy your shares. It happens when the stock closes above your strike price at expiration. Your shares sell automatically at the strike price — you keep the premium, and the cash lands in your account.

Is this strategy only for big portfolios?

No, but size matters for the income to feel meaningful. You can absolutely start with 100 shares of a $30 stock. The mechanics are identical — the dollar amounts are just smaller. Many traders start small to learn the process before scaling up.

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The Bottom Line

Selling covered calls won’t make you rich overnight — but that’s actually fine, because that’s not what they’re for.

Think of them less like a trading strategy and more like collecting rent on stocks you already own. You give up some upside, you get cash today. Over time, those premiums compound in a really satisfying way.

The realistic range for sustainable income? 1–2% per month in most market conditions, with some months better and some worse. That’s 12–24% annualized from premium income alone — on top of any appreciation in your shares.

Whether that’s worth it depends on what you’re holding and what you’re trying to accomplish.

For me, it’s become a regular part of how I manage my portfolio. Not magic. Just a trade I understand — and that keeps paying me while I figure out the rest.

That feels very on-brand for YM I Doing This.

Disclaimer: This article is for educational purposes only and is not financial advice. Options trading involves risk, including the potential loss of the entire amount invested. Please do your own research and consider consulting a licensed financial advisor before trading.