Moneyness Filter (Cushion): Stay Out of Trouble on the Wheel
Moneyness controls how far the strike is from the stock price — the safety cushion every wheel trader cares about. Learn how to use it on the screener.
What "moneyness" means
Moneyness is the percentage distance between the strike and the current stock price:
Moneyness % = (Strike − Stock) ÷ Stock × 100
- Negative moneyness = strike is below the stock. For puts that's "out of the money" (safer).
- Positive moneyness = strike is above the stock. For calls that's "out of the money" (safer).
The screener column you'll see is Cushion — same idea, but always shown as the safety distance for the option type you're screening.
Where to find it
In the filter sidebar:
- Put screener: Moneyness Range defaults to negative values (e.g. −30% to −2%).
- Call screener: Moneyness Range defaults to positive values (e.g. +2% to +30%).
The filter is a two-handle slider from −30% to +30%.
Recommended cushion ranges
For cash-secured puts:
| Aggression | Moneyness | Behavior |
|---|---|---|
| Very conservative | −15% to −8% | Lots of cushion, low premium |
| Balanced | −8% to −3% | Sweet spot for most wheel trades |
| Aggressive | −3% to 0% | High premium, frequent assignment |
For covered calls:
| Aggression | Moneyness | Behavior |
|---|---|---|
| Hold for upside | +10% to +20% | Small premium, miss less rally |
| Balanced | +3% to +10% | Standard wheel exit |
| Income-max | 0% to +3% | Big premium, often called away |
A worked example
You own AAPL at $180 and want a covered call that:
- Captures real premium
- Won't get called unless AAPL rallies 5%+
- Open the Covered Call screener.
- Type AAPL in the search box.
- Set Moneyness to +5% to +12%.
- Set DTE to 25 to 45 days.
- Sort by Premium descending.
You'll see only contracts above $189 strike — exactly the safety zone you wanted.
Why cushion beats raw delta sometimes
Two contracts can both have a 0.30 delta but very different cushions because of stock price and IV. A volatile $40 biotech might show 0.30 delta at −5% moneyness, while a sleepy $400 megacap might show 0.30 delta at −2%. Cushion in percent terms is often a more intuitive risk measure than delta alone.
Pro tip: Combine Delta (probability) with Moneyness (geometry) to express risk both ways.
Common mistakes
1. Forgetting the sign convention. Negative moneyness means OTM for puts and ITM for calls. The screener always orients the slider for the option type you're on.
2. Using too narrow a range. A range of −5% to −4% returns almost nothing. Give it at least a 5-percentage-point window.
3. Confusing moneyness with breakeven. Breakeven includes the premium received. A −5% moneyness put might have a breakeven of −7% after collecting premium.
Where to go next
- See Delta filter for the probability lens on the same idea.
- Read Bid-Ask Spread filter to avoid wide quotes near OTM strikes.
- Try the Conservative Wheel preset which uses moneyness aggressively.
Frequently Asked Questions
Is moneyness the same as cushion?
Yes — cushion is the screener's friendly name for the absolute distance the stock can move before the option goes in the money. Moneyness is the underlying slider range; cushion is the column display.
What moneyness should I use for safe wheel trades?
For balanced wheel trading, target 3–10% out of the money. That gives the stock room to move, keeps premium meaningful, and pairs well with delta in the 0.20–0.30 range.