Quick Example
A fully worked, purely illustrative NVDA covered-call example across five expiry prices.
#Illustrative inputs
| Input | Illustrative value |
|---|---|
| NVDA Stock Token entry price | $180 |
| Position | 10 share-equivalent units |
| Strike | $200 |
| Expiry | 30 days |
| Premium | $4 per share |
| Gross premium | 10 × $4 = $40 |
#Expiry outcomes
| NVDA at expiry | Stock value | Short-call effect | Premium | Covered-call value | PnL vs $1,800 cost |
|---|---|---|---|---|---|
| $170 | $1,700 | $0 | +$40 | $1,740 | −$60 |
| $195 | $1,950 | $0 | +$40 | $1,990 | +$190 |
| $200 | $2,000 | $0 | +$40 | $2,040 | +$240 |
| $220 | $2,200 | −$200 | +$40 | $2,040 | +$240 |
| $260 | $2,600 | −$600 | +$40 | $2,040 | +$240 |
10 × [min(S_T, $200) + $4]- S_T
- NVDA Stock Token price at expiry
#How to read the table
Below $200, the call expires without intrinsic value in this simplified European-style example. The holder participates in the stock move and keeps the $40 premium. At and above $200, terminal position value is capped at $2,040: $2,000 of strike value plus $40 premium.
At $220, simply holding ten shares would be worth $2,200, so the covered call trails holding by $160. At $260, that relative shortfall grows to $560. The premium cushions the first $4 per share of downside from the $180 entry price, but does not prevent a loss if the stock falls below $176.
The table isolates terminal economics. Fees, taxes, execution, multiplier changes and corporate actions are excluded.