What Happens If My Covered Call Expires In The Money?
📘 Overview:
If your covered call expires in the money (ITM), your shares will likely be called away — meaning they’ll be sold at the strike price. This is part of the deal with covered calls, and it’s not always a bad thing.
You still keep the premium you collected, and your total return is the premium plus any gain from your cost basis up to the strike price.
💸 Outcome Breakdown:
Outcome | What Happens | You Keep |
|---|---|---|
Expires OTM | Option worthless | Your shares + premium |
Expires ITM | Shares sold at strike price | Premium + capital gain (if any) |
💡 Extra Considerations:
Tax impact: If your shares are sold, that may trigger a capital gain. Know your holding period.
Assignment risk: If the option is deep ITM before expiry, you could be assigned early — especially near ex-dividend dates.
Cost basis matters: Selling at the strike price is only a “loss” if your basis was higher.
🧮 Try it yourself:
Use our Covered Call Calculator to model an ITM expiration.
Test outcomes for a strike slightly above your cost basis vs deep ITM, and see how it affects total return and breakeven.