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VolRadar Wheel Strategy Calculator
Calculate returns for the full wheel cycle: Cash-Secured Put → assignment → Covered Call. Track cost basis, RoC, and annualized returns.
The Wheel sells puts until assigned, then sells calls on the shares. Each phase generates premium income, reducing your cost basis over time.
Built for wheel traders running the full CSP → assignment → CC rotation. The calculator answers two questions at once: what’s my real cost basis after the put premium, and what’s the annualized return if the wheel completes as planned? Free, no signup, 1 or 2-phase modes.
Educational analysis — not investment advice. VolRadar surfaces options market data and signals; all trading decisions are your own. See our full disclaimer.
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Phase 1: Cash-Secured Put
$
$
$
days
What happens next?
Put Expires OTM ✓
+$350
0.63% RoC · Sell next CSP
Position Sizing
$
Enter account size to check if this position is appropriately sized.
CSP Results
Cost Basis (if assigned)
$551.50
Cash Required
$55,500
Premium Collected
$350
Breakeven
$551.50
Return on Capital
0.63%
Annualized RoC *
5.1%
If assigned, you buy shares at $551.50 — a 3.3% discount vs current price of $570.00.
Wheel OptimizerStarter
Prob of Profit
78.2%
Best CSP Strike
$385
Premium/Day
$6.40
+ liquidity filter · earnings gate · watchlist alertsUnlock Starter →
Find the best wheel setups automatically
VolRadar scans for high-RoC puts with liquidity + earnings gates.
Related Free Tools
What Is the Wheel Strategy?
The wheel strategy is a popular premium selling approach that cycles between cash-secured puts and covered calls. You start by selling a cash-secured put on a stock you want to own. If assigned, you sell covered calls against the shares. If called away, you start over with another put. Each phase generates premium income, reducing your effective cost basis over time.
How to Calculate Wheel Returns
The key metrics are: cost basis (strike minus put premium), Return on Capital (premium divided by cash required), and annualized return (RoC scaled to yearly based on DTE). After assignment, your adjusted cost basis drops further with each covered call. The full cycle return includes put premium + call premium + share appreciation if called away above your cost basis. This calculator tracks all three phases automatically.
Choosing the Right Put Strike
Most wheel traders target puts 5-10% below the current stock price, corresponding to roughly 0.20-0.30 delta. This provides a balance between collecting meaningful premium and maintaining a margin of safety. Higher IV environments allow selling further out of the money while still generating attractive returns. Always check IV Rank before entering — selling puts when IV Rank is above 50 means you are collecting above-average premium.
Wheel Strategy Risks and Mitigation
The main risk is the stock dropping significantly below your put strike, leaving you with shares at a loss. Only wheel stocks you would be happy owning long-term. Follow the 5% rule for position sizing, avoid earnings weeks unless intentional, and check liquidity (bid-ask spread) before entering. VolRadar's Conditions Check helps evaluate IV environment, earnings risk, and liquidity before you trade.
Understanding Annualized Returns
Annualized RoC assumes you could repeat similar trades for a full year at similar conditions. Formula: RoC × (365 / DTE) using calendar days. In practice, IV levels change, assignments may take longer, and market conditions vary. Use annualized returns as a benchmark for comparing setups, not as a prediction. A 0.64% RoC over 45 days annualizes to 5.2%, but running the wheel in a high-IV environment could yield 15-30% annualized across multiple cycles. * = annualized figure assumes continuous deployment of capital.
Who uses VolRadar’s Wheel Calculator
Active wheel traders — running the full CSP → assignment → CC rotation cycle. Use both phases of the calculator to project cost basis after the put leg and covered-call yield after assignment, then compare to the same ticker’s real-time CC Score on the Covered Call Screener.
Cash-secured put sellers — not running the full wheel, just selling puts for premium. Use Phase 1 only to see RoC, breakeven, and position sizing against your account. Cross-reference with Safest Stocks to Sell Puts for candidate screening.
Wheel candidates analysts — evaluating whether a specific stock is worth adding to the watchlist. Plug in current price, expected strike, and current premium to see if the annualized return justifies the capital lockup. Curated list at Best Wheel Stocks.
Income-focused retirees — wheeling blue chips and dividend aristocrats for steady premium income. Phase 2 (covered call on assigned shares) is where retirement income wheels spend most of the year. Conservative IV and defensible underlying quality matter more than headline yield.
Learners and planners — anyone trying to understand why wheel math works before placing a real trade. The 2-phase flow and annualized return explanation show the full cycle, not just a single contract’s premium.
Frequently Asked Questions
What is the wheel strategy?
The wheel (sometimes called the "triple income" strategy by traders) cycles between selling cash-secured puts and covered calls. You sell a put, get assigned (buy shares at a discount), then sell calls against those shares. Each phase generates premium income, reducing your cost basis over time.
What strike should I sell my put at?
Most wheel traders sell puts 5-10% below current price (0.20-0.30 delta). This balances premium income against probability of assignment. Higher IV environments allow selling further OTM while still collecting meaningful premium.
How do I calculate cost basis after selling puts?
Cost basis = Put Strike − Premium Collected per share. For example, selling a $390 put for $2.50 gives a cost basis of $387.50. If assigned, you buy 100 shares at effectively $387.50 each.
What happens if I get assigned?
When assigned on a short put, you buy 100 shares per contract at the strike price. Your effective purchase price is the strike minus the premium collected. You then move to Phase 2: selling covered calls against those shares.
When should I sell the covered call after assignment?
Sell a call at or above your cost basis so you profit if called away. Common approaches: sell at 0.30 delta, or at a strike above your breakeven. Target 30-45 DTE for optimal time decay.
What is a good annualized return for the wheel?
Experienced wheel traders target 15-30% annualized returns depending on market conditions and IV levels. Note that annualized returns assume you can repeat similar trades — actual results vary with market conditions.
How many contracts should I trade?
Follow the 5% rule: no single wheel position should exceed 5% of your total account. For a $50,000 account wheeling a $50 stock, 5% = $2,500 budget, which covers 1 contract ($5,000 assignment cost) — but barely. A $100,000 account could wheel 1 contract of a $50 stock comfortably within the 5% limit.
What are the main risks of the wheel strategy?
The primary risk is the stock dropping significantly below your put strike after assignment. Other risks include opportunity cost (capital tied up), missing large upside moves (capped by call strike), and assignment timing around dividends.
Does this calculator account for commissions?
Not automatically — subtract your broker per-contract fees ($0.50-0.65 typical) from the premium for more accurate results. Commissions reduce your effective RoC, especially on lower-premium trades.
Should I wheel stocks I do not want to own?
No. Only wheel stocks you would be happy holding long-term. If assigned during a downturn, you need conviction to hold and sell calls while the position recovers. Quality blue-chip and large-cap stocks with options liquidity work best.
Data sourced from ORATS, updated daily after market close. VolRadar provides educational analytics — not financial advice. Options involve significant risk of loss. Read our investment disclaimer.
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Founder & Options Analyst
Premium seller since 2018. Built VolRadar to replace the 55-minute evening research routine with a 30-second morning check.