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Wheel Strategy Calculator

Model the full wheel: cash-secured put, assignment and covered call. See your cost basis and annualized return in each scenario.

Wheel cycle calculator

Cash required
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Cost basis if assigned
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Basis after call premium
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Put breakeven
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ScenarioProfitReturnAnnualizedTime

Setup

Legs

TypeSideQtyStrikePrice

Option prices are filled with theoretical Black-Scholes values. Type your broker's real price to override (yellow = manual). For stock, "Strike" is your purchase price.

Results

Net credit
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Max profit
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Max loss
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Probability of profit
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Breakeven(s) at expiry
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Return on risk
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P/L at expirationP/L on selected date
Today
Delta (shares)
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Gamma
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Theta ($/day)
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Vega ($/1% IV)
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P/L by stock price

Stock priceChangeP/L at expiryP/L on selected date
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How the wheel strategy works

  1. Sell a cash-secured put on a stock you would like to own. Collect the premium.
  2. If the put expires worthless, keep the premium and sell another put.
  3. If you are assigned, you now own 100 shares at the strike price, with a cost basis reduced by the put premium.
  4. Sell a covered call on those shares, ideally at a strike above your cost basis.
  5. If the shares are called away, the cycle is complete and you start again with a new put.

Reading the wheel calculator

The calculator warns you when the call strike is below your cost basis, because being called away there locks in a loss.

Visualize each leg

Use the options calculator above the article to see the payoff chart of the put leg, then switch the strategy to Covered Call to model the second leg. You can also use the dedicated cash-secured put calculator and covered call calculator.

Risks of the wheel

The wheel works best on stable stocks you are happy to own. Its main risk is a large drop after assignment: you hold shares worth less than your cost basis, and selling calls above that basis may pay very little premium.

Frequently asked questions

Is the wheel strategy profitable?

It earns premium in flat or rising markets. In a sharp decline it loses money like owning the stock, reduced by the premiums collected.

Which stocks are best for the wheel?

Liquid stocks or ETFs you would be comfortable holding long term, with active option markets and tight bid/ask spreads.

Should I sell the covered call below my cost basis?

Usually not, because assignment would lock in a loss. Many wheel traders only sell calls at or above their cost basis.

How often can I run the wheel?

As often as each leg expires. Weekly and monthly expirations are both common; compare them using the annualized return.

For educational purposes only. Not financial advice. Options involve risk and are not suitable for all investors.

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