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What Is the Maximum Profit and Loss Potential of a Covered Call?

Max Profit = Premium + (Strike Price - Asset Purchase Price). Max Loss = Asset Purchase Price - Premium.
Greeks.Live17.11.25

What Is the Maximum Profit and Loss Potential of a Covered Call?

The maximum profit is limited to the premium received from selling the call option plus the difference between the call's strike price and the initial purchase price of the underlying asset. The maximum loss is substantial, equal to the purchase price of the underlying asset minus the premium received, which occurs if the asset's price falls to zero.

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