Wheel Strategy Calculator
Track total premium collected, adjusted cost basis and cumulative return across a full put-assignment-call cycle.
The wheel strategy is a sequence rather than a single trade, which is what a wheel strategy calculator has to account for. A cash secured put is sold; if it expires worthless the premium is kept and another is written; if it is assigned the shares are taken on and calls are written against them until they are called away, at which point the cycle begins again with cash. The nickname triple income strategy comes from those three sources of cash — the put premium, the call premium and any dividend paid while the shares are held — though only the two premium streams are counted here.
Formula: adjusted basis = assignment price - all premium collected per share
Your figures
Strike of the put that opened the cycle. Its cash requirement is what the return is measured against.
Whether the shares were taken on. Set to No and any call leg entered is ignored rather than rejected.
Price the shares were taken at, normally the put strike. Needed once the put has been assigned.
Strike of the call written against the assigned shares. Enter it with the call premium, or leave both blank.
Shares one contract covers — 100 on US equity options. Take it from your own contract specification.
Calendar days the cycle has run, from selling the put to now.
Your own broker's rate. Counted on the way in and on the way out of each leg.
Results
Profit if the shares are called away
+US$531.10
10.62% on US$5,000.00 of capital committed
- Adjusted cost basisAssignment price less every premium collected per share. It is also the break-even share price for the cycle, and the only figure that carries from one round of the wheel to the next.
- US$47.15
- Total premium collectedUS$2.85 a share across 100 shares.
- US$285.00
- Premium collections countedThe opening put, the call when it counts, and each further round. Commission is charged on a round trip for every one of them.
- 3
- Premium after commissionUS$3.90 of commission across every leg.
- US$281.10
- Capital committedThe put strike across the shares — the cash the cycle needed from the outset, whether or not assignment ever happened.
- US$5,000.00
- Return on capital committed43.08% annualised over 90 days.
- 10.62%
What this means
The cycle has collected US$2.85 a share across 3 collections, US$285.00 in total. Taking the shares at US$50.00 and subtracting every premium leaves an adjusted cost basis of US$47.15 a share, which is also where the cycle is level. Measured against the US$5,000.00 the put strike required from the outset, the cycle stands at 10.62%, or 43.08% annualised. That denominator does not change with assignment, so a cycle that was assigned and one that was not can be read side by side — an unassigned put here returns exactly what the cash secured put calculator returns for the same figures.
- The annualised return is a simple annualisation — the period return multiplied by 365 ÷ days. It is not compounded, and it assumes the same return could be repeated for a whole year, which nothing guarantees.
- American-style options can be assigned at any time before expiry, not only on the expiry date.
- Commission is counted as a round trip on every leg — once to open and once to close. If you intend to let the option expire rather than buying it back, enter half your per-contract rate.
Profit if the shares are called away: +US$531.10
The link reopens this calculator with the same numbers. Nothing you enter is sent to a server.
Continue with these figures
About the Wheel Strategy calculation
Because it is a sequence, the figure that matters is cumulative and no individual leg reports it. Every premium collected along the way lowers what the shares effectively cost, and a trader looking only at the assignment price against today's quote will read a loss where the position is level or ahead. The adjusted cost basis is the number that settles the question, and it is the only quantity in the strategy that carries from one round to the next.
This options wheel calculator totals the premium across the opening put, the covered call and every further round entered, works the adjusted cost basis and break-even share price from it, and expresses the result as a return on the capital the put strike required from the outset — the same denominator whether or not assignment ever happened, so an assigned cycle and an unassigned one can be read side by side.
Wheel Strategy formula
total premium per share = put premium + call premium + further premiums
total premium = total premium per share × shares covered
collections = 1 (put) + 1 (call, when assigned) + further rounds
commission = rate per contract × contracts × collections × 2
net premium = total premium − commission
adjusted cost basis = assignment price − total premium per share
break-even price = adjusted cost basis
profit if called away = (call strike − adjusted cost basis) × shares − commission
capital committed = put strike × shares covered
return = profit ÷ capital committed × 100
annualised = return × 365 ÷ days held- adjusted cost basis
- Assignment price less every premium collected per share — what the shares have effectively cost so far.
- collections
- The number of premiums counted: the opening put, the call when the shares are held, and each further round.
- capital committed
- Put strike × shares — the cash the cycle needed to be available from the day the put was sold.
- called away
- The covered call finishes in the money and the shares are sold at its strike, closing the cycle.
- days held
- Calendar days from selling the opening put to now, used only to annualise the cumulative return.
The adjusted cost basis exists because assignment feels like a defeat and frequently is not one. Someone assigned at 40 on a share now quoted at 38 sees two points of loss on the ticket, but if 2.55 of premium has been collected across the put, a covered call and one further round, the position is a fraction ahead rather than behind. Subtracting every premium from the assignment price is what converts a running total of small collections into a single share price that can be compared against a quote.
That same figure is the break-even price, and it is reported as a hint rather than as a second row for a specific reason: printing one number twice under two labels invites the reader to hunt for a difference between them. The cycle is level exactly where the shares are worth what they have effectively cost, so the definitions coincide by construction rather than by coincidence.
The denominator is the put strike across the shares, not the assignment price and not the premium. That is the cash which had to be available from the outset, and holding it fixed is what makes the two possible histories comparable: a put that expired worthless and a put that was assigned and worked through a call cycle are measured against the same committed capital, so an unassigned cycle here returns precisely what the cash secured put calculator returns for the same inputs.
The covered call leg is counted only when the put was assigned, because a covered call needs shares behind it. Entering a call against an unassigned put is not treated as an error — the leg is dropped, a note explains why, and the fields keep their values — because a reader toggling assignment off to compare the two paths should not have to clear the form to do it.
Commission multiplies by the number of collections rather than being charged once, which is the detail that quietly erodes a wheel run at small size. Each premium is a leg opened and closed, so three collections on three contracts at a modest per-contract rate is eighteen chargeable events rather than two, and the strategy's characteristic pattern of many small premiums is exactly the pattern that pays the most commission per unit of premium collected.
One check earns its own row: a call strike below the adjusted cost basis. Selling a call there means that being assigned closes the cycle for less than the shares have cost, even though every leg collected premium along the way. It is easy to arrive at after a fall, because the strikes that still pay meaningful premium drift down with the share price while the basis does not, and nothing on a broker's ticket compares the two.
Wheel Strategy: a worked example
Three 40-strike puts sold for 1.10 a share and assigned at 40, then a 42-strike call written for 0.85 and one further round collecting 0.60, held 120 days at 0.65 a contract.
- Shares covered3 contracts × 100 = 300
- Total premium per share1.10 + 0.85 + 0.60 = 2.55
- Total premium2.55 × 300 = 765.00
- Collections countedput + call + 1 further round = 3
- Commission0.65 × 3 contracts × 3 collections × 2 = 11.70
- Adjusted cost basis40 − 2.55 = 37.45
- Profit if called away at 42(42 − 37.45) × 300 − 11.70 = 1,353.30
- Capital committed40 × 300 = 12,000
- Return on capital committed1,353.30 ÷ 12,000 = 11.28%
- Annualised11.2775% × 365 ÷ 120 = 34.30%
The shares have effectively cost 37.45 each once every premium is subtracted, so the 42-strike call sits 4.55 above the basis and being called away closes the cycle at 1,353.30. Against the 12,000 the put strike tied up from the first day, that is 11.28% over 120 days, or 34.30% a year at the same pace.
How to use the Wheel Strategy calculator
- Enter the put that opened the cycle — its strike and the premium per share it was sold for. The strike sets the capital the whole cycle is measured against.
- Set whether the put was assigned. With assignment off, any call leg entered is ignored rather than rejected, so the two paths can be compared without clearing fields.
- Enter the assignment price if the shares were taken on. It is normally the put strike, and it is a separate field because a broker's fill can differ and because the basis should reflect what actually happened.
- Add the call strike and call premium together, or leave both blank. The pair is validated as a pair, since a strike without a premium describes a leg the arithmetic cannot value.
- Add one row under Further premium collected for every subsequent round — a rolled call, a second call after the first expired, anything collected against the same shares. Blank rows are ignored.
- Enter the days held from selling the opening put to now, then your own commission per contract, which is charged as a round trip on every collection counted.
- Read the adjusted cost basis against the current share price to see where the cycle really stands, and the return on capital committed to see what it has earned for the cash it has been holding hostage.
Limitations of the Wheel Strategy calculator
Every calculation makes assumptions. These are the ones that matter here.
- While the shares are still held the return counts realised premium only. The unrealised gain or loss on the shares themselves is excluded, so a cycle sitting on a large paper loss can still show a positive return until it is closed.
- The cycle is modelled as one continuous commitment of the put strike. In practice the capital requirement changes at assignment, and a broker margining the share position differently will show a different figure on the statement.
- Dividends received while the shares are held are not counted, even though they lower the effective cost basis in exactly the way premium does and are a real part of what the wheel earns on assigned shares.
- Every premium is treated as collected and kept. Buying a call back to roll it costs money, and only the net of that round should be entered as the further premium rather than the gross amount received.
- Annualising a wheel cycle is the least reliable figure on the page, because the strategy's return is lumpy by construction: long quiet stretches of small premiums punctuated by an assignment that changes the position entirely.
- Tax treatment is ignored. Premium, assignment and a later disposal are taxed differently in most jurisdictions, and a called-away cycle realises a gain on a date the strategy rather than the holder chose.
- Nothing here estimates the probability of assignment or of being called away. Both are entered as facts about what happened or as an assumption about what might, not derived from volatility.
Frequently asked questions about Wheel Strategy
What is my adjusted cost basis after assignment, and why does it matter?
It is the assignment price less every premium collected per share, and it is what the shares have genuinely cost after the cycle so far. It matters because it is the only figure that carries between rounds: the current share price compared against the assignment price says one thing, and compared against the basis it frequently says the opposite.
Why is the wheel strategy return measured against the put strike rather than the assignment price?
Because the put strike times the shares is the cash the cycle required from the day it opened, before anyone knew whether assignment would follow. Holding that denominator fixed lets an assigned cycle and an unassigned one be compared directly, which would not be possible if the basis of measurement changed at the moment of assignment.
What happens if the call strike is below my adjusted cost basis?
Being called away closes the cycle for less than the shares have cost, so the result is a loss despite every leg having collected premium. The calculator flags it as its own row rather than leaving it in the arithmetic, because the situation arises naturally after a fall and no broker ticket compares a strike against a basis.
Do I have to be assigned for the wheel to work?
No — an unassigned put is a complete outcome, and the cycle simply reports the premium kept against the capital committed. Set assignment to No and the calculator drops any call leg entered, notes that no shares were taken on, and returns exactly what a cash secured put on the same figures would return.
How many premium collections should I enter?
One row for each premium actually received against the same shares after the first covered call. A cycle that has been running for months with calls rolled repeatedly might have six or eight rows, and each one is counted both in the premium total and in the commission, since every leg was opened and closed.
Why does the calculator ignore what the shares are worth now?
Because the shares are still held, so any gain or loss on them is unrealised and would turn a record of what has been collected into a forecast of what might be. The adjusted cost basis is the bridge between the two — compare it against the current quote yourself and the unrealised position is immediately visible.
Last reviewed . See our methodology and editorial policy.
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