Wheel Strategy Calculator
The Wheel is a repeating income cycle: sell cash-secured puts until assigned, then sell covered calls on the shares until they’re called away. This calculator totals the income from one full cycle.
Total Premium
$210.00
Annualized Income
28.4%
Assigned Cost Basis
$42.90
per share after both premiums
Maximum Profit
$410.00
premiums + stock gain to call strike
Capital Required
$4,500
Assumptions & limitations
- Assumes one full cycle: put assigned, then shares called away at the call strike.
- Premiums are per share with the 100-share multiplier; commissions, slippage, and taxes are excluded.
- Annualized income extrapolates this cycle across a year — real fills vary.
Wheel cycle economics
Cost Basis = Put Strike − Put Premium − Call PremiumMax profit adds both premiums to any gain between the put strike (your purchase price) and the call strike (your sale price).
How It Works
- 1Phase 1: sell cash-secured puts and collect premium until you’re assigned shares.
- 2Phase 2: sell covered calls against those shares and collect more premium.
- 3Phase 3: shares get called away at the call strike — then the wheel starts again.
Frequently Asked Questions
What stocks suit the Wheel?
Liquid, stable, quality names you’d happily own for months — with tight option spreads and reasonable volatility. Avoid earnings-driven lottery tickets.
What’s the main risk?
A sharp decline after assignment: you own shares from the put strike while the stock trades far lower, and call premium shrinks.
What returns do wheel traders target?
Commonly 15–30% annualized on capital in normal volatility regimes — not guaranteed and highly dependent on stock selection.