FITools covered-call research
Your next covered call doesn't have to come from the same five stocks.
Search beyond familiar tickers without lowering your standards. FITools screens the business, compares calls by strike, duration, yield, and risk, and keeps the obligation visible after you sell.
The full approach, from the first company screen through expiration.
Built for established, self-directed investors. Sell calls only on shares you would be willing to part with at the strike; the final decision stays yours.
The trade
The premium pays for a real obligation.
A covered call begins with 100 shares you already own. You sell someone else the right to buy those shares from you at a strike price before expiration, and you collect the premium when the trade opens.
If the stock stays below the strike, you usually keep the shares and the premium. If it rises above the strike and the call is assigned, the shares are sold at the strike. You keep the premium and the stock gain up to that price, while the buyer receives the upside above it.
The stock's downside remains yours in either case. The premium provides a small cushion, not a floor under the shares. A covered call belongs only where you accept all three facts before entry: the downside of owning the stock, the possibility of selling at the strike, and the upside you give up above it.
A worked example
Read the yield beside the outcome that creates it.
Say Harlow Mills trades at $50 and you own 100 shares. A 30-day call with a $52.50 strike is quoted at $0.60. Selling one contract collects $60 against $5,000 of stock, or 1.2% for the 30-day period.
FITools also displays 14.6% annualized yield: 1.2% multiplied by 365 divided by 30. Annualization puts contracts with different expiration windows on a common basis. It does not assume that this trade can be repeated for a year.
Below the strike — example close at $45
The call expires without assignment. You keep the 100 shares and the $60 premium. The shares have fallen $500 from the $50 starting price; the premium offsets $60 of that decline, leaving the position down $440 before any other costs or dividends.
Above the strike — example close at $55
The shares are sold at $52.50. You keep the $60 premium and the $250 stock gain up to the strike, for $310 before costs. The $250 gain from $52.50 to $55 goes to the call buyer. That forgone upside belongs beside the income when you judge the result.
Both endings are acceptable only if you were willing to own the stock through the downside and willing to sell it at $52.50 before the trade began.
Companies first
The same-five-stocks habit is a research bottleneck.
Most covered-call research begins with a short list because investigating more companies takes too long. That makes the tool, rather than the investment case, decide how wide the opportunity set can be.
FITools begins with the company. Twenty-two rendered filters cover valuation, profitability, growth, balance-sheet health, dividends, and sector. In the default flow, only companies that clear your financial criteria have their option chains screened.
This is not a reason to buy shares for the premium alone. Any new company still needs to earn a place in the portfolio on its own merits, and any call still requires a strike at which you would be content to sell. The wider field gives your judgment more companies to examine without letting an attractive option price rescue a weak business.
Maximum P/E Ratio · Minimum Earnings Yield · ROE · ROIC · Gross Margin · Maximum Debt-to-Equity Ratio · Altman Z-Score · Dividend Yield
Contract comparison
Annualize the yield, then inspect what created it.
The options screen applies the contract criteria you choose: days to expiration, strike distance, open interest, daily volume, maximum bid-ask spread, implied-volatility range, delta, theta, gamma, moneyness, and whether earnings occur before expiration. A minimum annualized-yield filter is available when you want to set a floor.
The product labels the comparison column Income (APY). Under the hood, it is simple annualization: the call's extrinsic premium, meaning the option's remaining time value beyond any intrinsic value, divided by the current share price and multiplied by 365 divided by days to expiration. A 1% premium over 30 days and a 2% premium over 60 days therefore land at roughly the same annualized yield.
That common scale helps compare duration. It does not tell you whether either call is worth selling. The strike determines how much upside you are offering, delta is at most a rough proxy for assignment odds, earnings can change the risk inside the window, and poor liquidity can make an attractive quoted premium difficult to trade.
Transparent scoring
A high annualized yield can still earn a weak grade.
Every screened call receives a 0–100 score and an A–F grade. Income edge accounts for 30% of the engine score, and it begins only after the annualized premium clears the higher of two hurdles: the risk-free rate for the same duration or a passive SPY covered-call benchmark. A premium that fails the comparison earns zero income-edge points, however large it looks in isolation.
The rest of the score examines assignment safety, liquidity and execution, volatility quality, and time to expiration. When the market runs hot, the engine raises the required income edge and moves its preferred delta in a more conservative direction.
Open the result to inspect the user-facing profile: Vol Edge, Protection & Return, Time Decay, and Liquidity. Named warnings stay attached to the contract, and Why This Contract states the case in writing. FITools supplies an argument you can challenge, not a grade you have to obey.
See the complete scoring method →After entry
The strike matters more after the order fills.
FITools checks open positions against their rules every five minutes, market data permitting. Covered-call rules can surface profit capture, the approach to expiration, proximity to the strike and breakeven, a move into the money, earnings before expiration, and dividend-driven early-assignment risk.
A decay gauge keeps premium captured against the profit target and daily theta visible on each position. When the stock moves or expiration approaches, the roll-research view compares replacement contracts side by side with scenario tables and a P&L chart. You can weigh the new strike, expiration, credit or debit, and resulting position before deciding whether to roll, close, or accept assignment.
If market data is stale, urgent alerts are withheld rather than fired from old quotes. FITools keeps the conditions visible; it does not place the trade or make the decision.
See the position rules and when they fire →The scoring method, in full
Five weighted components, one grade.
A premium is never good in isolation; it is only good against the alternatives. The same capital could sit in Treasury bills, and the same strategy could run passively on the S&P 500, so every contract is judged on its edge over the higher of those two bars. That comparison is the heart of the scoring math: a contract earns income credit only for what it pays beyond that hurdle, a fat premium that fails to clear it earns nothing, and the bar rises when market volatility runs high, because wilder markets demand a wider margin.
FITools compresses the full judgment into one score with a letter grade, A to F, built from five weighted components:
| Component | Weight | What it measures |
|---|---|---|
| Income edge | 30% | What the premium pays beyond the hurdle for that duration, with diminishing credit as it grows |
| Assignment safety | 20% | How far the contract sits from likely assignment: the option's delta, at most a rough proxy for assignment odds, held near a conservative target, plus the cushion between the stock price and the strike |
| Liquidity | 20% | Whether you can enter and exit at a fair price: bid-ask spread, open interest, trading volume |
| Volatility quality | 20% | Whether the option's implied volatility, the movement the market has priced in, is generous next to how the stock has actually moved, and how stable that pricing has been |
| Tenor | 10% | How the expiration fits the method, favoring middle distances around a month and a half out and penalizing the shortest-dated contracts |
The score is built to argue against trades, too: named warning flags ride with every result, calling out premiums that fail the hurdle, thin edges, wide spreads, short expirations, and implied volatility running below what the stock has actually been doing. When volatility data is missing, that component scores below neutral rather than assuming the best. And every result shows its work: the component scores, their weights, and a written rationale for the grade.
In the app, these five components surface regrouped into four labeled panels, Vol Edge, Protection & Return, Time Decay, and Liquidity, each with its own subscore; the arithmetic above is the engine underneath them. The grade ranks candidates; it does not make the decision. Whether you want to own more or less of a company this month is a judgment no score can hold, and it stays with you.
The position rules, in full
Every rule, and when each one fires.
Selling the call is the middle of the trade, not the end. The follow-through is decided in advance: name the conditions that deserve your attention, then check for them on a schedule instead of by mood. FITools evaluates every open position against its rules throughout the market day. The rules, and when each one fires:
- Profit target
- fires when the position has captured your chosen share of the premium, the signal that most of the trade's value is already banked.
- Expiration window
- fires when the position enters its final stretch, where time decay does its fastest work.
- Expiration floor
- fires when days to expiration drop below your minimum.
- Breakeven approach
- fires when the stock price closes in on your breakeven.
- Strike crossing
- fires when the stock moves into the money, the zone where assignment becomes live.
- Stop loss
- fires when the position's loss crosses your limit.
- Earnings ahead
- fires when an earnings date lands before expiration, the event risk the screen let you avoid up front.
- Dividend assignment risk
- fires when the option's remaining time value falls below a pending dividend, the point where early assignment becomes economically rational for the buyer.
Alerts carry three severities, from informational to urgent, with per-rule cooldowns so a persistent condition does not become noise. The rules keep watch; the decisions they set up remain yours.
Early assignment
An ex-dividend date can change the assignment decision.
A call buyer may exercise before expiration when taking the shares is worth more than keeping the option alive. Dividend dates create one of the clearest cases: if an in-the-money call's remaining extrinsic value falls below the pending dividend, exercising before the ex-dividend date can be economically rational for the buyer.
For the covered-call seller, that can mean the shares leave earlier than expected and the buyer, not the former shareholder, receives the dividend. FITools evaluates the relationship between the remaining extrinsic value and the pending dividend and can flag dividend-driven early-assignment risk.
The flag is a reason to review the position, not an instruction. You may decide to close the call, research a roll, or accept assignment based on the shares, strike, taxes, dividend, and your own plan.
Who this page is for
For investors prepared to live with both sides of the strike.
Good fit
- You already own or independently evaluate individual companies.
- You have enough capital to hold stock-backed positions in 100-share increments without concentrating the portfolio around one trade.
- You understand that a covered call keeps the stock's downside and sells the upside above the strike.
- You want to search beyond familiar tickers without lowering the company-quality bar.
- You expect to choose, place, and manage every position yourself.
A better starting point elsewhere
- If the obligation, assignment, or expiration mechanics are still new, learn the strategy by hand. The free FITools handbook includes covered-call education.
- If you want a list of trades to copy, automated execution, or personalized recommendations, FITools is the wrong tool.
- If the annual cost of a premium research membership would be meaningful relative to your portfolio, FITools is not for you yet. The free education remains available.
- If you want the founder story, both strategies, the complete workflow, fit, and membership terms, see the full options-selling product.
Covered-call questions
Does a covered call protect me if the stock falls?
Only by the premium received. If a $50 stock falls to $45 after you collect $0.60, the $60 premium offsets part of the $500 share decline, but the remaining loss is still yours. A covered call is not downside protection beyond that cushion.
What happens when a call is assigned?
Your broker delivers the shares at the strike price. You keep the option premium and the stock gain up to the strike. Any gain above the strike belongs to the call buyer. Assignment can occur at expiration or earlier.
Why might assignment happen before expiration?
Early exercise can make sense to the buyer when the option has little remaining extrinsic value. An upcoming dividend can increase that incentive when the pending dividend exceeds the option's remaining extrinsic value.
Does annualized yield predict what I will earn in a year?
No. FITools multiplies the contract's period yield by 365 divided by days to expiration so calls with different durations can be compared on a common basis. It does not assume the same premium, stock price, volatility, or acceptable trade will be available again.
Is the market data real-time?
No. Market data is delayed by 15 minutes. FITools shows the timestamp, market status, and freshness state. Confirm current prices with your broker before acting.
Does FITools connect to my broker or place the trade?
No. FITools is a research and position-management tool. You place orders with your broker and can enter positions manually; no brokerage connection is required.
Does FITools tell me which call to sell?
No. It applies the screening criteria, calculates the grade, states the rationale, and surfaces warnings. You decide whether the company, strike, premium, expiration, and obligation fit your plan.
Covered calls, researched like investments
Choose a call you are willing to live with on both sides of the strike.
Start with a company you are prepared to own, compare the premium with the upside and obligation you are taking on, and keep the position visible through expiration. The FITools methodology lays out how those decisions fit together.