Premium Yield Calculator
Turn a premium into a yield you can compare across strikes and expirations.
Your numbers
Dollars collected. One contract sold at 2.50 is 250.
Cash your broker holds against the trade.
Add this to see the annualized figure.
Results
- Premium yield
- 5.00%
- Annualized yield
- 60.83%
How it works
Premium yield is simply the premium you collected divided by the capital tied up while you hold the trade. On its own it says nothing about whether a trade is good, because a 2% yield over seven days is a very different proposition from 2% over ninety. That is what the annualized figure fixes: it scales the period yield up to a full year so that a weekly put and a quarterly call land on the same axis. Treat annualized yield as a comparison tool, not a forecast — it assumes you can repeat the same trade at the same yield all year, which nobody does.
yield = premium ÷ collateral · annualized = yield × (365 ÷ days to expiration)
Worked example
You sell one 50-strike cash-secured put for 2.50 and your broker holds $5,000. You collected $250 on $5,000, a 5.0% yield. With 30 days to expiration that annualizes to 5.0% × (365 ÷ 30) = 60.8%.
Common questions
Should I use the strike or the net collateral?
Use whatever your broker actually holds. Most brokers hold strike × 100 less the premium credited, which is the convention Wheel Income's screener uses. Using the gross strike amount instead understates your yield slightly.
Is a high annualized yield a good trade?
Not by itself. Annualized yield rises as expiration gets closer, so very short-dated contracts always look spectacular. Check delta, liquidity and the underlying before the yield number.
Does this account for assignment?
No. It measures the return if the option expires worthless. If you are assigned, your return depends on where the stock goes afterwards, which is what the covered call side of the wheel is for.
Other wheel calculators
- CSP Cash CalculatorHow much cash gets locked up when you sell a put.
- Assignment Probability CalculatorRead delta as a rough odds of being assigned.
- IV Rank CalculatorFind out where today's implied volatility sits in its yearly range.
- Theta Decay CalculatorSee what time decay is worth to you per day.
- Wheel Capital CalculatorHow much capital it takes to run the wheel on a given stock.
- Covered Call Max Profit CalculatorWhat a covered call makes if the shares get called away.
- Options Liquidity CheckerCheck whether a contract is actually tradable before you sell it.
- Wheel Position Size CalculatorHow many contracts fit inside your risk budget.
- Wheel Expectancy CalculatorWhat one wheel cycle is worth on average, given your own numbers.
Stop doing this by hand
Wheel Income screens live option chains for cash-secured puts and covered calls, then tracks every cycle from assignment through called away.
Try the screenerFor information and educational purposes only. Not investment advice. Options carry risk, including loss of the entire position.