Issuers call bonds when interest rates fall, so callable bonds trading above par will probably be redeemed early. Investors look at the lower of yield to call and yield to maturity – the “yield to worst”.
How to use the Yield to Call Calculator
- Annual coupon (interest)
- Call price
- Market price
- Years until call
- Coupon frequency
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter the annual coupon, the call price, the market price, years until the call and coupon frequency.
Tips
- Use annualised volatility and interest rates as decimals per year.
- Remember that one standard option contract usually covers 100 shares.
- Options lose time value as expiry approaches – re-run the numbers as dates change.
- Derivatives can lose more than you expect; understand the maximum loss before trading.
Common mistakes to avoid
- Mixing days and years for time to expiry.
- Ignoring commissions and the bid–ask spread.
- Forgetting dividends when pricing options on dividend-paying stocks.
Inputs explained
| Field | What to enter |
|---|---|
| Annual coupon (interest) | Amount in your currency |
| Call price | Amount in your currency |
| Market price | Amount in your currency |
| Years until call | A number |
| Coupon frequency | Choose one: Annually, Semi-annually, Quarterly, Monthly |
What each result means
- Yield to call = ytm([Market price], [Call price], [Annual coupon (interest)]÷[Call price], [Coupon frequency], [Years until call])×100
- Current yield = [Annual coupon (interest)]÷[Market price]×100
- Total received if called = [Annual coupon (interest)]×[Years until call] + [Call price]
Example values
How the main result changes when Annual coupon changes and everything else stays at the example values above:
| Annual coupon (interest) | Yield to call (%) |
|---|---|
| 30 | 2.149 |
| 45 | 3.581 |
| 60 | 5.013 |
| 75 | 6.444 |
| 90 | 7.875 |
| 120 | 10.736 |
Formula
Solve market price = Σ coupon ÷ (1 + y/f)^t + call price ÷ (1 + y/f)^N for yN = years until call × fWorked example
Inputs — Annual coupon (interest): $60; Call price: $1,030; Market price: $1,060; Years until call: 4; Coupon frequency: Semi-annually.
Results — Yield to call = 5.013 %; Current yield = 5.66 %; Total received if called = $1,270.00.
Frequently asked questions
What is yield to call?
The return if a callable bond is redeemed at the first call date.
When is YTC more relevant than YTM?
When the bond trades above its call price.
What is yield to worst?
The lowest of the yield to call and the yield to maturity.
What formula does the Yield to Call Calculator use?
Solve market price = Σ coupon ÷ (1 + y/f)^t + call price ÷ (1 + y/f)^N for y.