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The return from a single trade scaled to a full year. Formula: (Premium / Capital) × (365 / DTE) × 100. A $2 premium on a $50 stock over 30 DTE = 48.7% annualized. Does not account for compounding or losses.
⚡ KEY TAKEAWAY: Looks impressive but is misleading if you ignore losses. Track actual account returns, not annualized returns on winners only.
DTE (Days to Expiration)
Enter at 30–45 DTE for optimal theta/gamma balance. Close or roll at 21 DTE or 50% profit — whichever comes first.
Assignment
Not a disaster — it's the plan in the wheel strategy. If you only sell puts on stocks you'd own, assignment is just the next step.
Roll (Rolling)
Roll for a net credit or don't roll at all. Rolling for a debit just delays a loss. Best done before the position goes deep ITM.
Breakeven
Always know your breakeven before entering. If the stock can realistically reach it, either widen the margin or skip the trade.