How is this calculated?

Target annual dollar return equals capital multiplied by the target annual percentage. Monthly target equals that figure divided by 12. If a strike price is entered, contracts supported equals capital divided by strike times 100, and premium needed per contract equals the monthly target divided by that contract count.

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How much premium do I need to collect running the wheel strategy each month to hit my annual return target?

Q: How much premium do I need to collect running the wheel strategy each month to hit my annual return target?

Calculates the monthly option premium needed to hit a stated annual return target on capital allocated to the wheel strategy, and optionally estimates the premium needed per contract at a given strike price.

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Enter Your Target

This is a target to measure against, not a promise the market pays this much premium.

Your Result

Fill in the fields on the left and click Calculate to see your monthly premium target.

How this is calculated

This shows the premium you would need to average, not a promise that the market offers that much premium without taking on more delta or assignment risk.
Monthly target equals your target annual dollar return divided by 12, shown both in dollars and as a percent of the capital allocated.
If you enter a typical strike price, this also estimates how many contracts your capital supports and the premium needed per contract, assuming standard 100-share contracts.
Chasing a fixed premium target by selling closer to the money or further out in time increases assignment and loss risk. Pair this with the assignment rules generator below before you size up strikes to hit a number.

Risk & liability disclaimer: This calculator produces a mathematical estimate based on the numbers you enter. It is not financial advice and does not guarantee any trading outcome. Trading involves risk of loss, and past position sizing decisions do not predict future results. Trading Habits is not a broker-dealer, registered investment adviser, or tax professional, and is not affiliated with any broker, exchange, or data provider. We do not guarantee this tool is error-free or suitable for your situation - always verify results independently and consult a licensed professional before making any trading or financial decision. You could lose some or all of the capital you trade with.

How much premium do I need to collect running the wheel strategy each month to hit my annual return target?

Enter Your Target

Your Result

How this is calculated

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