Question 1

What's a good annualized return for selling covered calls or cash-secured puts?

Accepted Answer

Many income-focused options sellers target somewhere in the low-to-mid teens annualized on collateral, but the “right” number depends on the stock's volatility and your risk tolerance — higher premium always means the market is pricing higher risk.

Question 2

What happens if my cash-secured put is assigned?

Accepted Answer

You buy 100 shares per contract at the strike price. Your effective cost basis is the strike minus all premium collected — many wheel-strategy traders then sell covered calls against those shares.

Question 3

Why is annualized return higher for shorter-dated options?

Accepted Answer

Time decay is fastest near expiration, so shorter cycles often produce higher annualized figures — but they also mean more frequent decisions, more commissions, and more chances for the market to move against you.

Question 4

Does this calculator account for early assignment or dividends?

Accepted Answer

No — it models outcomes at expiration only. American-style options can be assigned early, most commonly just before an ex-dividend date when a call is deep in the money.

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