What is annualized screen yield?
Annualized screen yield is the cycle yield extrapolated to a full year, used as a comparison metric when ranking screened option setups; it is not a forecast or projected return.
Formula
(premium ÷ capital at risk) × (365 ÷ days to expiration)Worked example
A 30-day SPY $580 covered call collects $4.20 in premium against $58,000 of capital at risk. Cycle yield = $4.20 ÷ $580 = 0.72%. Annualized screen yield = 0.72% × (365 ÷ 30) = 8.81%.
Common misinterpretation
Treating annualized screen yield as an expected annual return. It assumes you can replicate the same premium, on the same underlying, every 30 days for 365 days. Implied volatility crushes after earnings, price moves out of optimal strike range, and assignment all break that assumption. Realized returns are almost always materially lower than annualized screen yield.
Limitations
- Does not model commissions, slippage, or bid-ask fill quality.
- Does not account for assignment, early exercise, or roll cost.
- Assumes the same strategy at the same delta is available every cycle, which is rarely true in regime changes.
- Premium is mid-of-bid-ask; actual fills are typically worse.
Tools that use this metric
Primary references
- Cboe Options Institute — "Annualized Yield" definition
- OCC — "Characteristics and Risks of Standardized Options"
References cite the source institution where the underlying definition or rule is published. OptionIncomeTools does not redefine standardized options terms; it ranks and presents data using widely accepted definitions.
Related glossary entries
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Educational only — not investment advice. See the disclaimer and methodology. Material methodology corrections are logged at corrections.