The wheel strategy

The wheel is a cash-secured put, then assignment, then covered calls on the shares you now own, then starting over. It pays well while the loop turns. Most of what is worth knowing is about the cycles where it stops turning, which is where six of the ten articles below spend their time.

• The wheel strategy, one full cycleThe wheel is a cash-secured put, then assignment, then covered calls on the shares, then getting called away, then starting again. One complete Ford cycle from open to close, every number shown, including what it returned.
• How to pick stocks for the wheelThe screen that matters for wheel candidates: a price your account can secure, a chain you can get filled in, volatility that pays without being binary, and a company you could hold for three years. With the thresholds written down.
• What the wheel actually ties upOne wheel needs strike times 100 in cash, for as long as the cycle runs, which can be years. What that means for account minimums, how many wheels a given balance supports, and the requirement nobody mentions.
• Assigned at a loss, and what to do about itThe put assigned and the stock kept falling. Four options, worked with numbers, plus the decision rule that beats all of them and the tax trap waiting if you sell and restart within 30 days.
• When no strike above your basis pays anythingThe rule says never sell a call below your cost basis. After a 16 percent drop the strike above your basis pays $6 for 45 days. What the arithmetic actually says, and the three cases where breaking the rule is right.
• What happens to the wheel in a crashIn a broad selloff every wheel assigns in the same three weeks, your cash becomes stock at the worst prices, and the premium that finally looks generous arrives with nothing left to sell it with. Worked on a five-wheel account.
• Wheeling ETFs against wheeling single stocksIndex ETFs pay roughly a third of what a single stock pays on the same delta, and cannot gap 45 percent on one announcement. The capital each needs, worked on SPY, IWM, XLF and Ford, and where the crossover really sits.
• What $1,000 a month from the wheel actually requiresWorking backwards from an income goal to the account size behind it, using a real cycle return, then subtracting the stranded cycles, the idle days and the tax. The number is roughly double what the gross premium suggests.
• Compounding option premium, and what stops itReinvesting wheel premium adds about 2 points a year over simple returns, and then contract lot size stops you cold: adding one more Ford wheel takes 16 cycles of collected premium, or 24 after tax.
• When to stop wheeling a stockSix exit criteria worth writing down before you need them: the thesis broke, the premium stopped paying for the risk, the position outgrew the account, you are wheeling to avoid a loss, the tax bill turned, and the strategy stopped fitting the goal.

Read them in this order

New to it: one complete cycle with every number, then what a wheel ties up, then how to pick the ticker. That is the strategy. Everything after it is about the cycle going wrong.

Already wheeling and want the pages that change decisions: why the strike above your basis pays six dollars, what happens when all five positions assign in the same three weeks, and the exit criteria worth writing down before you need them.

What this series will not tell you

That the wheel is an income machine. It is a stock accumulation strategy that pays you while you wait to accumulate, and in a bad tape it will hand you every share it promised, all at once, at prices set on the way down. That is not a flaw in the execution. It is what the strategy does.

It also will not tell you $25,000 produces $1,000 a month. At a realistic 1 percent a month on committed capital, that goal is a six-figure question, and the arithmetic behind it is on the page rather than in a footnote.

And it will not explain how the OptionsKing confidence score is computed. The gate guarantee is public and the computation is not: nothing below 60 is ever surfaced, 75 is the recommended bar, and how it works covers what that means.

Questions people actually ask

Run your own numbers

• Wheel strategy calculator full-cycle return across the put, the assignment and the call.
• Position size calculator how many contracts the account actually supports.
• Annualized return calculator any credit and any holding period, as a yearly rate.
• Wheel candidates by ticker dated snapshots across 60 liquid names.