The following covered call writing calculations were made with one of the Microsoft Excel PC templates provided with every copy of COVERED CALL WRITING DEMYSTIFIED,COVERED CALL WRITING WITH EXCHANGE TRADED FUNDS (ETFs)and COVERED CALL WRITING WITH Qs AND DIAMONDS:
The "Total Annual Yield" column is the return to the investor on an annualized basis from premium income and dividends (if any). Note that for the first strike price ($40), which is a fair amount above the current market price the returns are all very solidly double-digit.. And for the next highest strike price ($42.50) all of the expiration dates offer above 8%, with large potential for additional capital appreciation.
The "Annual Yield/W Cap. App." is the return to the investor on an annualized basis from premium income, dividends (if any), and capital appreciation (if the price of the stock is higher than the strike price when the call options expire). Since a rise in the underlying stock is uncertain, the best measure of returns from covered call option writing is the "Total Annual Yield."
Actual Covered Call Writing Calculations for Bed, Bath & Beyond (BBBY)