Net cost
Definition · Level 1 · Options basics
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What a covered call really costs: the stock price minus the premium received per share. It is the base this course uses for static return and return if called.
Example
Stock 100, call sold for 1.10 → net cost 98.90.
Where Tradecraft teaches it
Level 1 · Options basics, in the lesson “Choosing the strike & measuring the return”: Out, at or in the money, and the static return and return if called on your net cost.
Related terms
- Return if calledThe return on a covered call if the shares are called away: the max profit divided by the net cost (stock price − premium).
- Static returnThe return on a covered call if the stock is unchanged at expiry: the profit then, divided by the net cost (stock price − premium).
- 0DTE“Zero days to expiration”: options on their final trading day.
- AM vs PM settlementWhether a cash-settled index option’s final value comes from opening prices on expiration morning (standard monthly SPX, last trade the day before)…
- American-styleExercisable on any business day up to and including expiration; the norm for US stock and exchange-traded fund (ETF) options.
- AssignmentNotice that an option you are short has been exercised, obliging you to sell (short call) or buy (short put) the stock at the strike.