The wheel strategy means selling a cash-secured put, getting assigned the shares, then selling covered calls until they are called away, collecting premium the whole way. This free calculator models one full cycle and shows your total premium, effective cost basis, and annualized return. Educational only, not advice.
Wheel Strategy Calculator
Model a full wheel cycle: cash-secured put, assignment, covered call, called away. See your annualized return on capital.
Inputs
Results
| Capital secured | — |
| Effective cost basis / share | — |
| Total return on capital | — |
| Breakeven if never called | — |
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How to use the wheel calculator
- Enter the put strike, premium, and days for the cash-secured put you sell to start the wheel.
- Enter the call strike, premium, and days for the covered call you sell after assignment.
- Set the number of contracts and read your full-cycle return.
The formula behind it
- Total premium = (put premium plus call premium) x 100 x contracts
- Effective cost basis after put assignment = put strike minus put premium
- Profit if called away = (put premium plus call premium plus the gain from put strike to call strike) x 100 x contracts
- Annualized return = total return x 365 / total days in the cycle
Wheel strategy FAQ
What return can the wheel strategy make?
Realistic wheel returns often land somewhere in the mid teens to low thirties annualized in normal conditions, driven mostly by the premium you collect. Higher premium means higher volatility and higher assignment risk.
What if the stock drops after I am assigned?
You keep selling covered calls at or above your effective basis to keep collecting premium while you wait for a recovery. Picking stocks you are comfortable holding is the core of managing wheel risk.
Do I need a big account to run the wheel?
You need enough cash to secure the put, which is the strike times 100 per contract. Lower-priced stocks let you run the wheel with a smaller account.
Educational only, not financial advice.