Cash-secured put + covered call cycle
Wheel Strategy Calculator
Model one options wheel cycle after put assignment. Calculate adjusted stock basis, net premium, profit or loss, return, annualized return and the called-away outcome.
| Stock price at call expiration | Stock sale / value | Cycle P/L | Return | Outcome |
|---|
The annualized figure is a simple extrapolation of one entered cycle. It does not assume the same trade, premium or assignment conditions can be repeated.
How the options wheel calculation works
The wheel strategy begins with a cash-secured put. This calculator assumes the put is assigned, so the shares are purchased at the put strike. It then adds the premium from one covered call and values the shares at the call’s expiration. If the ending stock price is at or above the call strike, the shares are treated as called away at that strike. If it is lower, the shares remain in the account at the entered market value.
Wheel strategy formulas
Adjusted basis per share = put strike − (net premiums ÷ shares)
Ending value = min(ending stock price, call strike) × shares
Profit or loss = ending value + net premiums − put strike × shares
Return = profit or loss ÷ (put strike × shares) × 100
Simple annualized return = return × 365 ÷ total cycle days
The maximum profit for the entered covered call occurs when the shares are sold at the call strike. The maximum loss assumes the shares fall to zero after both net premiums have reduced the basis.
Verified example
Suppose one 100-share put is assigned at US$100 after collecting US$3 per share. A covered call is then sold at a US$110 strike for US$2.50 per share. With US$1 of fees for each stage, total net premiums are US$548 and adjusted basis is US$94.52 per share. If the stock is US$112 at call expiration, the shares are called away for US$11,000. The cycle profit is US$1,548, the return on US$10,000 of secured cash is 15.48%, and the simple annualized return over 45 days is 125.56%.
Reading the results
- Adjusted basis subtracts both option premiums and both fees from the put assignment cost.
- Profit or loss includes the stock outcome at the call expiration plus net premiums.
- Called away means the ending price is at or above the call strike, so upside is capped at that strike.
- Shares retained means the ending price is below the call strike; the displayed loss or gain is unrealized unless the shares are sold.
Limits and assumptions
This tool models one simplified wheel cycle in which the cash-secured put is assigned and one covered call is held to expiration. It does not model an unassigned put, early assignment, rolling, taxes, dividends, interest on collateral, changing contract multipliers, additional calls, multiple assignment lots or bid/ask slippage. American-style options may be assigned before expiration, especially near dividends or when little time value remains.
Inputs are limited to 100,000 contracts, 100,000 shares per contract, 1,000,000,000 total shares, monetary values up to 100,000,000 and 3,650 days. The adjusted basis must remain positive. Results are educational scenario estimates, not investment, tax or legal advice and not a guarantee of income.