The break-even price for a wheel strategy trade is the price the stock must stay above (for a CSP) or below (for a CC) for the position to be profitable. It is directly tied to your Adjusted Cost Basis.
CSP Break-Even: For a cash-secured put, the break-even is: Strike Price − Premium Collected. If you sell a $100 put for $2.00, your break-even is $98 — you make money as long as the stock is above $98 at expiration.
Campaign Break-Even: For the full wheel strategy, break-even is your Adjusted Cost Basis — the total cost of your shares minus all premiums collected across the entire campaign.
Why It Matters: Many traders panic-sell shares when they drop below the original purchase price (assignment price), not realizing their actual break-even is significantly lower due to premiums collected. Knowing your true break-even prevents premature, loss-locking decisions.
Examples of Break-Even Price in Action
- 1Selling a $150 CSP for $3.00 — break-even is $147. The trade profits as long as the stock is above $147 at expiration.
- 2After 4 CC cycles collecting $1.00 each on a $150 assignment, ACB is $146. Selling shares at $148 is still profitable.
- 3A trader with ACB of $95 sees the stock at $97 and panics. But they are $2 above break-even — patience is correct.