$10,500
Full profit released
Applies when the cushion is larger than the profit.
The closed profit fits inside the cushion above target. Take all of it and the base is still above the floor.
Safe Withdrawal Calculator
Work out what an options income account can actually pay you. The draw comes only from cycles you have closed, nets what you have already taken, and stops at a floor you set. Then move your equity against that floor and watch the rule change. Free, in the browser, no account.
Your account
Results update as you type
$
Marked to market today, open losses included.
$
Usually the capital you contributed, not what it grew to.
$
Net, from cycles closed since your last distribution.
$
Taken since that same date. Stops profit counting twice.
%
90 days since your last distribution
Safe to withdraw
this period
$6,400
- Closed-cycle profit
- +$14,200
- Already withdrawn
- −$3,700
- Gross available
- $10,500
- Room above target
- $6,400
- Safe to withdraw
- $6,400
Held this period $4,100 39.0% of your profit stays in
Equity after the draw $150,000 exactly on your $150,000 floor
Equity vs target +$6,400 cushion above the floor today
Annualized pace 16.6% 4.09% of equity over 90 days · simple
The three rules, on your numbers
$6,400
Stops at the floor
Applies when the cushion is smaller than the profit.
Profit is larger than the room above target, so the draw stops where the floor starts and the remainder stays in the account.
$5,250
Throttled while you rebuild
Applies when equity is below target.
There is no cushion to cap against, so the throttle you set releases a fraction and steers the rest into rebuilding the base.
All three are computed from the same $10,500 of gross available. The one marked active is the rule your inputs land on.
A teaching tool that runs on the numbers you type, not on your broker data or live quotes. Nothing here is financial advice. The PremiumGuardHQ safe withdrawal engine runs this same rule automatically, sourcing closed-cycle profit and prior distributions from your connected account on every sync.
Find the point where your account changes rules.
Your closed profit is fixed. What decides how much of it is safe to take is where your equity sits against your target. Drag the handle to move equity through the floor and watch the cap and the throttle trade places.
premiumguardhq.com/tools/safe-withdrawal-calculator Capped
Safe to withdraw $6,400 61.0% of your gross available released
Equity $156,400
Target floor $150,000
Held back $4,100
Base held Withdrawn Cushion left Below the floor
Profit is larger than your cushion, so the draw stops at the room above target. $4,100 stays in the account and the base holds at $150,000.
The handle moves equity only. Your closed profit, target and throttle stay exactly as you entered them above.
How the math works
Six formulas produce everything on this page, and there is no estimation anywhere in them. Each one carries its result for the page's default account: $156,400 of equity against a $150,000 floor, $14,200 of closed profit with $3,700 already drawn, a 50% throttle, over a 90 day period.
Gross available
Gross available is the profit that has closed since your last distribution, less what you have already taken against it.
gross available = closed-cycle profit − prior withdrawals= $10,500 $14,200 of closed profit with $3,700 already drawn leaves $10,500 still to take. The subtraction is what stops the same profit funding two withdrawals. Record a distribution, the counter resets from that date, and both figures start again.
Room above target
Room is the cushion between where your account stands today and the floor you set.
room = current equity − target equity= +$6,400 $156,400 against a $150,000 target leaves $6,400 of cushion. Equity is marked to market with open losses included, which is the part that keeps the number honest: a large realized profit can still mean a small safe withdrawal when open positions are underwater.
Safe to withdraw, above the floor
With a cushion in place, the draw is whichever is smaller: the profit you earned, or the room you have.
safe = min(gross available, room)= $6,400 $10,500 of profit against $6,400 of room releases $6,400, and the account lands exactly on $150,000. The other $4,100 is not lost, it just stays in the account and counts toward the next period. When the cushion is the larger of the two, the whole profit releases and this formula never binds. Sitting exactly on your target is the edge of this rule: the room is zero, so nothing releases, however much profit you closed.
Safe to withdraw, below the floor
Once equity is under target there is no cushion to cap against, so a throttle you set decides how much releases.
safe = gross available × throttle= $5,250 At a 50% throttle, $10,500 releases $5,250 and the rest goes back into rebuilding the base. This is the one case where a withdrawal moves the account further below its target, which is exactly why it is a fraction rather than the full amount. Set the throttle to 0% and a below-target account pays nothing until it recovers.
Held this period
What you earned but did not take, which stays in the account and carries forward.
held = gross available − safe to withdraw= $4,100 $4,100 in the default account. Held profit is not forfeited: it is still closed profit, and the next period it will still be sitting in the gross available line waiting for the cushion to open up.
Annualized pace
The draw restated at a full-year pace, so periods of different lengths can be compared.
annualized = (safe ÷ equity) × 365 ÷ days in period= 16.6% $6,400 on $156,400 is 4.09% for the 90 days, which annualizes to 16.6%. Read it as a description of this one period, not a rate you can count on. It is simple annualization: it scales linearly, does not compound, and assumes the next period produces the same closed profit, which no market promises. This is the one number on the page that would flatter you if you let it.
This is not a safe withdrawal rate.
Most people arrive at "safe withdrawal" through the 4% rule, so it is worth being precise about the difference. The 4% rule answers a retirement question: how fast can I spend a portfolio down over thirty years. This answers an income question: how much of what I earned is genuinely mine to take right now.
What the number is
A percentage of your portfolio balance, set once and adjusted for inflation.
A dollar amount, recomputed from the profit that has closed since you last paid yourself.
Where the money comes from
Whatever you have to sell to raise it, principal included.
Closed-cycle profit only. Open premium and unrealized gains are not eligible.
A year with no gains
Still pays out. The balance falls by the full withdrawal.
Pays nothing. No closed profit means there is nothing that qualifies.
A drawdown
Withdrawal is unchanged, which is what makes early bad years so damaging.
Throttled to a fraction you set, so the rest goes back into rebuilding the base.
What it protects
A 30-year horizon. Ending with nothing left is an accepted outcome.
The capital producing your income. The floor is the whole point of the rule.
Neither is a substitute for the other. If most of your capital sits in index funds, the 4% rule is still the right frame for that money. This rule is for the slice you are actively selling options against, where income arrives in lumps as cycles close and the temptation is to spend premium that has not finished being earned.
A year of paying yourself
The calculator prices one period. Here is a full year on a $150,000 floor at a 50% throttle, reviewed quarterly. Each rule shows up once, including the drawdown in Q3. The closed profit figures are assumptions chosen to walk through every case, not results from any account.
| Period | Closed profit | Equity at review | Vs target | Rule | Withdrawn | Held | Equity after |
|---|---|---|---|---|---|---|---|
| Q1 | +$3,600 | $156,900 | +$6,900 | Released | $3,600 | · | $153,300 |
| Q2 | +$4,100 | $152,800 | +$2,800 | Capped | $2,800 | $1,300 | $150,000 |
| Q3 | +$2,900 | $146,500 | −$3,500 | Throttled | $1,450 | $1,450 | $145,050 |
| Q4 | +$5,300 | $153,900 | +$3,900 | Capped | $3,900 | $1,400 | $150,000 |
Closed profit, year $15,900 across four quarterly reviews
Paid out $11,750 73.9% of what closed
Ending equity $150,000 back exactly on the floor
The year pays out $11,750 on a $150,000 base, which is 7.83% of the floor. The remaining $4,150 was earned and simply never released: some of it because the cushion was too thin in Q2 and Q4, the rest because Q3 was a drawdown and the throttle sent half of that quarter's profit back into the base.
Notice what Q3 actually costs. Equity comes into the review at $146,500, $3,500 under target, and the $1,450 that releases takes it to $145,050. That is the honest edge of this rule: below the floor it does not stop the bleeding, it slows it. A 0% throttle would have paid nothing that quarter and gone into Q4 with $145,050 plus whatever the quarter earned, which is the more conservative choice and a perfectly reasonable one.
The line worth taking from the year is the last one. After four distributions the base is back at $150,000, unchanged. Every dollar that left the account came from a cycle that had already closed, which is the whole difference between drawing income and slowly spending your collateral. The wheel strategy calculator shows how those closed cycles are built in the first place.
Safe withdrawal calculator FAQ
What is a safe withdrawal rate for an options income account?
There is no single percentage, because the honest answer is not a rate at all. A wheel account earns in lumps as cycles close, so the safe number for a given period is whatever profit has actually closed since you last paid yourself, minus what you have already taken, and never more than the cushion sitting above your target equity. The calculator returns a dollar figure rather than a percentage for that reason. The annualized pace it shows describes the period you entered; it is not a rate you can count on repeating.
How is this different from the 4% rule?
The 4% rule is a spending rate applied to a portfolio balance: take roughly 4% of the starting value each year, adjust for inflation, and on the historical record for a stock and bond mix a 30-year retirement usually survives it. It deliberately spends principal. This calculator does the opposite. It is a source rule rather than a rate: money can only come from cycles you have already closed, and a floor at your target equity stops the draw before it reaches the capital producing the income. In a flat year the 4% rule still pays out and the balance falls. Here, a period with no closed profit pays nothing.
Why does only closed-cycle profit count?
Premium hits your account the moment you sell an option, but on an open cycle it is not yet yours to spend. Sell a put, collect the credit, then get assigned well below the strike, and that credit is cushioning an unrealized loss rather than funding income. Only a closed cycle has a number that cannot reverse. Counting open premium as income is the most common way a wheel seller quietly spends the collateral that was generating the premium in the first place.
What happens when my account is below target equity?
The engine switches from capping to throttling. Above the floor the draw stops at the room above target, so the base is never crossed. Below the floor there is no room to cap against, so a throttle you set releases a fraction of the closed profit and steers the rest into rebuilding the base. At a 50% throttle, $10,500 of closed profit releases $5,250. Set it to 25% to rebuild faster, or 75% to keep more income flowing. Be clear-eyed about the trade: a draw taken while you are under target does move the account further below it, and the throttle is what decides how much further.
How should I set my target equity?
Start with the capital you actually contributed, the money you deposited rather than the figure the account has grown to. That makes the floor a promise about your own principal. Raise it deliberately when you want a larger base producing income, and understand the trade: every dollar added to the target is a dollar of cushion given up, so withdrawals get capped sooner. Lowering the target to free up a bigger draw is the one adjustment worth being suspicious of, because it quietly turns the floor from a rule into a preference.
How often should I take a withdrawal?
Often enough that the income feels real, rarely enough that one bad month cannot force the decision. Monthly and quarterly both work. What matters more than the interval is that the counter resets when you take one: record the distribution, and the closed profit that funded it stops counting toward the next draw. That reset is what stops the same profit being spent twice, and it is the piece a spreadsheet almost always gets wrong after a few periods.
› Free tool · part of PremiumGuardHQ
The rule is simple. Running it every period is the hard part.
This calculator works when you can tell it what actually closed. Connect a broker and PremiumGuardHQ knows: every cycle reconciled through assignments, every prior distribution netted off, equity marked to market, and the safe number recomputed on every sync.
- Sourced from closed cycles only
- A hard floor at your target
- Set your own throttle rate
- 14-day free trial