Wheel strategy calculator
Model a full wheel cycle: cash-secured put → assignment → covered call.
Runs 100% in your browser- Put yield (annualised)
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- Cost basis if assigned
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- Full-cycle profit
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- Return on cash
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- Annualised (cycle)
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- Total premium
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How to calculate wheel strategy returns
- Enter the cash-secured put. Set the put strike, premium received and days to expiration.
- Enter the covered call. Set the call strike, premium and days for the call leg you’d sell if assigned.
- Read the cycle returns. See cost basis, full-cycle profit, return on cash and annualised yield.
The two halves of the wheel
The wheel is a repeating cycle on a stock you would be happy to own. First you sell a cash-secured put: you set aside the strike × 100 in cash and collect a premium. If the put expires worthless you keep the premium and sell another; if the stock falls through the strike you are assigned the shares at the strike, with the premium lowering your effective cost basis (strike − put premium). Then the second half begins — you sell a covered call against those shares, collecting more premium, until they are called away and you are back to cash. Rinse and repeat.
What the cycle returns
This calculator models one full assignment-then-called cycle. The put yield annualises the put premium against the cash secured (premium ÷ strike, scaled to 365 days) — the return if you were never assigned. The full-cycle profit per share is (call strike − put strike) + both premiums, i.e. any gain from buying low and selling higher, plus every premium collected along the way. Return on capital measures that profit against the cash you tied up, and the annualised figure scales it by 365 ÷ (put days + call days) so a faster cycle looks better than a slow one. The cash-secured put caps your capital at the strike, which is what makes the ROC meaningful.
Where the wheel bites
The clean cycle assumes the stock cooperates. In a sharp decline you are assigned shares that keep falling, and a covered call sold at-or-above your basis can strand you — unwilling to sell at a loss, collecting shrinking premiums on a sinking position. The strategy earns steady income in flat-to-rising markets and quietly accumulates risk in falling ones, so it lives or dies on picking stocks you genuinely want to hold. Many wheelers set put strikes near the expected move to balance premium against assignment odds.
Educational tool only — not financial advice. Assumes a full assignment-then-called cycle; you can be left holding a declining stock below your cost basis. Options trading carries a high level of risk.
Frequently asked questions
- The wheel is an income cycle: sell a cash-secured put on a stock you’re willing to own; if assigned, you buy 100 shares at the strike (minus the premium, your cost basis); then sell covered calls against them until the shares are called away — and start again.
- The put strike minus the put premium you collected. Selling covered calls afterwards lowers it further with each premium.
- If you’re assigned on the put and later called away on the call, your profit per share is (call strike − put strike) + put premium + call premium. This tool shows that as a dollar amount, a return on the cash you secured, and an annualised rate.
- You can be assigned shares in a falling stock and hold them well below your cost basis, and your upside is capped once you sell calls. The wheel suits stocks you genuinely want to own.
- No — it computes in your browser.