Capped upside
Covered call maximum profit formula
Maximum simplified profit occurs when the stock is at or above the short call strike at expiration and shares are called away.
Formula
Max profit per share equals call strike minus share basis plus premium received. Multiply by 100 shares per standard contract and by contract count.
Hypothetical example
With a $100 share basis, $110 short call strike, and $3.25 premium, max simplified profit is $13.25 per share, or $1,325 for one standard 100-share contract before costs.
Primary reading: OIC covered call strategy overview · OIC options pricing overview · FINRA options overview · Investor.gov options overview · OCC options disclosure document