How to use this calculator
- Set the ticker, contracts, current share price, and days on the wheel.
- Click "Add cycle" for each option you've sold, in order - the tool decides put or call from where you are in the wheel.
- For each cycle, enter the strike, the premium collected, and whether it expired worthless or was assigned.
- Read the result: total premium, adjusted cost basis, net P&L, and annualized return on capital across the whole run.
What it tells you: how much a full wheel - puts, assignment, then covered calls - has actually earned and where your cost basis stands across every cycle.
How this calculator works
The wheel is a sequence, not a single trade — so this calculator is a ledger. You add one row per option sold, in order. Because the wheel's rules fix what you can sell at any moment (puts while you hold cash, calls while you hold shares), the calculator derives whether each cycle is a put or a call from the cycles above it. You only enter the strike, the premium, and whether the option expired worthless or was assigned.
It then walks the cycles in order and tracks the money. Every premium adds to total premium and net cash flow. A put that is assigned spends cash to buy 100 shares per contract and flips you into holding shares. A call that is assigned sells those shares and returns you to cash. Net cash flow is the real money in and out; total P&L adds the market value of any shares you still hold, using the current price you entered.
Adjusted cost basis is the wheel's signature number. When a put assigns you, your basis starts at the strike. Every premium collected on that share lot — the assigning put plus each covered call after it — lowers the basis. Return on capital divides total P&L by the largest put strike you sold (the most cash you needed secured at once); enter the days you have run the wheel and it is annualized.
What is the wheel strategy?
The wheel is an income strategy that loops two trades you may already know. You sell a cash-secured put on a stock you would be happy to own. If it expires worthless, you keep the premium and sell another. If it is assigned, you buy the shares — and now you sell covered calls against them. If a call expires worthless, you keep the premium and sell another; if it is assigned, the shares are called away and you are back to cash, ready to sell puts again.
Each lap collects premium and, ideally, nudges your cost basis down. The wheel rewards patience and good stock selection — and punishes running it on a name you would not want to hold through a 30% drawdown.
Worked example
A fixed, hypothetical illustration — not live market data. The numbers stay constant so the math is easy to follow.
The calculator loads a full four-cycle wheel, run over 120 days on one contract. The hypothetical stock is trading near $230 when the first put is sold:
- Cycle 1 — Put $220, $3.80: expired worthless. Keep $380, still in cash.
- Cycle 2 — Put $220, $4.10: assigned. Buy 100 shares at $220; keep $410.
- Cycle 3 — Call $230, $3.50: expired worthless. Keep $350, still holding shares.
- Cycle 4 — Call $235, $3.20: assigned. Shares called away at $235; keep $320.
Total premium collected is $1,460. The shares were bought for $22,000 and sold for $23,500 — a $1,500 stock gain — so net P&L is $2,960. On $22,000 of secured capital that is a 13.45% return, roughly 40.9% annualized over 120 days. The wheel ends flat, holding cash, ready for the next put.
Change any outcome to "Assigned" or edit a strike and watch every figure update. Try setting cycle 4 back to "Expired" — you will still be holding shares, and the calculator switches to showing your adjusted cost basis and marking the open position to market.
Edge cases this calculator handles
The wheel is a multi-step loop, and the hard part is carrying numbers from one leg to the next. A single-trade calculator cannot — this ledger does.
- A cost basis that falls as you go. Every premium you collect — from the cash-secured put, then from covered calls after assignment — lowers your effective cost basis. The ledger carries that forward, so your adjusted basis reflects all the income, not just the assignment price.
- Each leg's type is derived from where you are. While you hold cash the cycle is a put; once assigned it becomes a call. You cannot accidentally model a covered call while you are still in cash — the state decides the leg.
- Shares still held are marked to market. If a cycle ends with you holding shares, total P&L includes their value at the current price, so an open wheel shows the honest unrealized position, not just booked premium.
- Return measured on peak capital. Return on capital uses the largest cash commitment any put required, not an average, so the percentage is not flattered by a small late position.
- Zero elapsed days. The annualized figure shows "N/A" rather than dividing by zero.
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Common mistakes
- Running the wheel on a stock you do not want. The whole strategy assumes assignment is acceptable. On a name you would never hold, one bad cycle ends the wheel.
- Counting premium and ignoring the share drawdown. While you hold assigned shares your downside is the stock's downside. Premium softens it; it does not cancel it.
- Selling calls below your cost basis. If you are impatient to escape a position and write a call under your adjusted basis, assignment locks in a loss.
- Treating annualized return as a salary. A good annualized figure assumes smooth, repeatable cycles. Real wheels stall on stocks that gap down and sit there.
- Over-committing capital. Each contract ties up the full strike in cash. Running several wheels at once can leave you unable to take assignment everywhere.
Frequently asked questions
What is the wheel strategy?
The wheel is an options income strategy. You sell cash-secured puts on a stock you would like to own; if a put is assigned you buy the shares, then sell covered calls against them; if a call is assigned the shares are called away and you return to selling puts. Each option sold is one cycle.
How is wheel cost basis calculated?
When a put assigns you, your starting cost basis is the put strike. Every premium you collect afterwards — the assigning put itself, plus each covered call — lowers it. This calculator shows the adjusted cost basis of the shares you currently hold as the strike minus all premium per share collected on that lot.
Why does the calculator pick put or call for me?
Because the wheel decides it for you. While you hold cash you can only sell puts; once you own shares you sell calls. So each cycle type is set by whether you are holding shares — you only enter the strike, premium, and outcome.
What does net cash flow mean versus total P&L?
Net cash flow is the real money in and out: premium collected, minus cash spent buying assigned shares, plus cash received when shares are called away. Total P&L adds the current market value of any shares you still hold, so it reflects open positions too.
How is return on capital figured for the wheel?
Capital is the largest put strike you sold times 100 per contract — the most cash you needed secured at once. Return on capital is your total P&L divided by that capital. Enter the number of days you have run the wheel to see it annualized.
Can I model a wheel that is still open?
Yes. Log the cycles completed so far. If your last cycle leaves you holding shares, the calculator marks you as holding shares and uses the current price you entered to mark the open position to market in total P&L.
Does the wheel always make money?
No. If the stock falls hard while you hold assigned shares, the loss on those shares can dwarf the premium collected. The wheel works best on stocks you are genuinely willing to own through a drawdown.
When should I use the wheel?
When you want a repeatable income routine on a stock you would be glad to own - sell cash-secured puts until assigned, then covered calls until called away, and repeat. It fits patient, cash-backed traders who prefer process over prediction. Skip it on a stock you only tolerate for the premium: the whole risk is getting assigned and holding through a drawdown. It is an income engine, not a way to rescue a bad pick.
Related tools and guides
The wheel is built from two single trades. Model one leg at a time with the Cash-Secured Put Calculator and the Covered Call Calculator. If a put goes against you before assignment, repair it with the Rolling Decision Calculator. See any multi-leg position at expiration with the Payoff Diagram Builder.
For the strategy behind the math, read The Wheel Strategy Explained, What Happens When an Option Is Assigned and How Much Buying Power Options Use. Every term is defined in the options glossary. Wondering how this compares to simply holding shares? See Wheel Strategy vs Buy and Hold.
Educational tool only. Nothing here is financial advice. The wheel carries the full downside risk of stock ownership during its assigned-shares phase — only run it on stocks you are willing to hold.