Covered Call and Cash-Secured Put Yield: Premium as a % Explained

Covered-call yield is the call premium divided by the share price; cash-secured put yield is the put premium divided by the strike, the cash you set aside. Vyreon reports both for the expiry nearest 30 days, at the money and 5% and 10% out of the money, with a simple annualized figure. A premium is not a return: the stock can move against you by more than the premium.

What Is A Cash-Secured Put Yield?

Selling a cash-secured put means selling a put while holding enough cash to buy the shares at the strike if assigned. The premium is income for taking that obligation. Yield compares it with the cash committed:

Cash-secured put yield = put premium ÷ strike

The breakeven is the strike minus the premium: the price at which the position starts losing money at expiry. Vyreon shows it as a distance below the current price.

What Is A Covered Call Yield?

Selling a covered call means selling a call against shares you own. You collect the premium but give up gains above the strike if the shares are called away. Yield compares the premium with the value of the shares:

Covered-call yield = call premium ÷ share price

Annualized Yield

Vyreon scales each yield by 365 ÷ days to expiry. This is a simple scaling for comparing expiries and stocks, not a projection: it assumes, unrealistically, that the same premium could be collected again and again with no losses.

Illustrative example: a stock at $100 has a 30-day at-the-money put priced at $2.00. The put yield is 2.0%, annualized 2.0% × 365 ÷ 30 = 24.3%, and the breakeven is $98, 2.0% below the price. A 5% out-of-the-money put (strike $95) at $0.80 yields 0.84% (10.2% annualized) with a breakeven of $94.20, 5.8% below the price.

How Vyreon Measures It

Expiry: the listed expiry nearest 30 calendar days, and at least 7 days out.
Target strikes: puts at the price, 5% below and 10% below; calls at the price, 5% above and 10% above.
Premium: the closing midpoint between bid and ask. When no strike is listed exactly at the target, the premium is interpolated linearly between the quoted strikes on either side. Vyreon never extrapolates beyond the quoted strikes; if a target has no strike on both sides, that figure is withheld.
Annualized: yield × 365 ÷ calendar days to expiry.

Using fixed targets (at the money, 5% and 10% away) makes yields comparable across stocks and over time without publishing a full strike grid.

Why Higher Yields Are Not Better Deals

Premium is a price for taking on risk. For the same moneyness and time to expiry, a higher premium means higher implied volatility: the market is pricing bigger moves in either direction, including moves that lead to assignment or a loss. Yields can rise ahead of earnings for the same reason.

What It Does Not Tell You

Your return. A cash-secured put can lose far more than its premium if the stock falls; a covered call keeps all the downside of owning the shares and caps the upside.
The price you would get. Midpoints are a reference; real fills can be worse, especially where bid-ask spreads are wide.
Taxes, commissions, early assignment or dividends.
Whether selling options suits you. This is a measurement, not a recommendation.

Sources

The Options Clearing Corporation (OCC), Characteristics and Risks of Standardized Options, the options disclosure document: the obligations and risks of writing covered calls and puts, and assignment.
Fischer Black and Myron Scholes, "The Pricing of Options and Corporate Liabilities", Journal of Political Economy (1973), and Robert C. Merton, "Theory of Rational Option Pricing", Bell Journal of Economics and Management Science (1973): option prices rise with volatility.
John C. Hull, Options, Futures, and Other Derivatives (Pearson, many editions): option pricing and the inputs to the premium.