I want to do a leap spread on an existing covered call option. How do I calculate the rate of return to determine if it's worth doing the leap spread?
Outside of software that can calculate the returns: You could calculate your possible returns on that leap spread as you ordinarily would, then place the return results of that and the return results for the covered call position side by side for any given price level of the stock you calculate, and net them out. (Netting out the dollar amounts, not percentage returns.)
Not a great answer, but there ya go. Software like OptionVue is expensive
You don't necessarily have to use a LEAP to do a spread. Since you are doing a covered call, I'm assuming that you would be comfortable with having that call exercised and you are bullish on the stock. So doing a spread trade with the short call option would essentially be capping your maximum profit without risking the obligation to sell the stock below market value.
An example for the payoff from a bull call spread: long lower strike call, short higher (covered) strike call can be found here