Wheel Strategy Calculator
Model a complete wheel cycle end to end — sell a cash-secured put, get assigned, write a covered call, have the shares called away — and see what the whole thing actually returns. Crucially, it splits the result into premium income and stock gain, because only one of those repeats.
Leg 1 — cash-secured put
Leg 2 — covered call after assignment
Capital required
$1,600
$16.00 × 100 shares
Premium income
$95
5.94% — both legs
Stock gain / loss
$200
12.50% — $16.00 → $18.00
Total cycle profit
$295
Over 65 days
Cycle return
18.44%
103.5% annualized
Premium-only annualized
33.3%
Strips the one-off stock gain
The cycle: you tie up $1,600, collect $55 on the put, get assigned at $16.00 for a cost basis of $15.45, collect $40 on the call, and the shares go at $18.00. Net $295 over 65 days.
If the put just expires — the most common outcome, and you never reach the call — that's 3.44% in 35 days, about 35.8% annualized, and the capital frees up immediately.
Whole-cycle breakeven is $15.05. Below that price at the end, both premiums together haven't covered the decline.
Why the Split Between Premium and Stock Gain Matters
This is the number almost every wheel return calculation gets wrong, and it's the reason this page exists.
A completed cycle where you were assigned at $16 and called away at $18 contains a $200 capital gain. That gain is real, but it is not the strategy working — it's the stock going up. Fold it into an annualized figure and you get a headline return that you cannot reproduce on demand, because next cycle the stock might not move at all, or might move against you.
The premium legs are the repeatable part. That's the income the wheel actually manufactures, and it's the number to judge the strategy on. The stock component is a function of where you set your strikes relative to each other and whether the market cooperated — useful to know, dishonest to annualize.
Both figures are shown above, deliberately separated.
The Cycle This Calculator Doesn't Show
Every input here assumes the cycle completes. The one that hurts is the one that doesn't: you're assigned at $16, the stock falls to $12, and now there is no call strike above your cost basis paying anything worth collecting.
At that point the choices are all mediocre. Sell calls at $16 for a few cents and wait. Sell calls at $13 for real premium and accept that assignment realizes a loss. Or hold and collect nothing. Wheel traders who get into trouble almost always got there this way, and no calculator warns you in advance — the only real defense is refusing to sell puts on stocks you wouldn't willingly own through a drawdown.
That's why ticker selection matters more than strike selection. Our screener filters on IV rank, liquidity and earnings timing across 300+ tickers, and this guide covers what actually makes a stock suitable.
The Other Calculators
This page models the whole cycle. If you want to price a single leg in more detail, the cash-secured put calculator covers collateral, breakeven and downside protection, and the covered call calculator covers static versus if-called return once you're holding shares.
Frequently Asked Questions
How do you calculate wheel strategy returns?
A completed wheel cycle has three components: the put premium, the covered call premium, and the difference between the call strike and the put strike. Add them together and divide by the collateral you put up, which is the put strike times 100 per contract. Annualize by multiplying by 365 divided by the total days both legs were open.
What counts as a full wheel cycle?
Selling a cash-secured put, being assigned the shares, selling a covered call against them, and having the shares called away. That returns you to cash and the cycle starts again. Most of the time the put simply expires worthless and you never reach assignment, which is a shorter and more common outcome than a full cycle.
Should the covered call strike be above the put strike?
Almost always. If the call strike sits below the put strike you were assigned at, the stock leg of the cycle loses money, and the premium from both legs has to cover that loss before you break even. It can still be a positive cycle, but you should know you are relying on premium to offset a realized stock loss rather than adding to a stock gain.
Can you lose money running the wheel?
Yes. The wheel caps your upside at the call strike but leaves your downside nearly as open as owning the stock. If the shares fall well below your cost basis after assignment, you either sell calls far below your basis and lock in a loss, or you hold and wait. The premium collected only cushions the first part of a decline.
What happens if the stock drops after I am assigned?
You own shares below your cost basis and there is no covered call strike above that basis paying meaningful premium. The usual choices are to wait for a recovery while collecting nothing, sell calls at or above your basis for very little, or sell a nearer strike and accept that assignment would realize a loss. This is the main way wheel traders get stuck.
How long does a wheel cycle take?
It varies. Each leg is typically 30 to 45 days, so a cycle that goes to full assignment on both sides often runs 60 to 90 days. Cycles where the put expires worthless reset in a single expiration, and cycles where the stock falls can leave you holding shares for months.
Want this as a spreadsheet?
Free Google Sheets version with all three calculators — cash-secured put, covered call, and the full wheel cycle — so you can model trades offline and keep your own copy.
Single-trade math only. The screener and income sheets add live data, trade journalling and tax estimates.