Wheel Module 1 — The Wheel Strategy

Learn · Wheel · Step 2 of 5 · Learn home · Prev: Wheel Learning Series · Next: Module 2 — Selecting candidates

You already finished Learn Foundations (options basics + platform tour). This page is only the wheel strategy—sell puts, maybe own stock, sell calls, repeat.

Formats: Short videos + this page
Est. time: ~30–45 min

What is the wheel?

The wheel is a repeating income strategy in four steps:

Sell a cash-secured put on a stock you would own
If assigned → you buy 100 shares per contract at the put strike
Sell a covered call on those shares
If called away → shares are sold at the call strike; you can start again with step 1

Goal: earn premium over time. You are not trying to guess every short-term move in the stock.

The two phases

Phase	What you do	What you need in the account
A — Puts	Sell a cash-secured put	Cash to buy 100 shares × strike if assigned
B — Covered calls	Own shares + sell a call	100 shares per contract

You can repeat Phase A many times (puts expire without assignment). After assignment, you move to Phase B. After shares are called away, you can return to Phase A.

Phase A — Cash-secured puts (videos)

You sell a put, collect premium, and reserve cash in case you must buy the stock. Video 1

Watch on YouTube Video 2

Watch on YouTube

Phase B — Covered calls (videos)

You already own the stock. You sell a call and collect premium. If the stock rises above the call strike, your shares may be called away at that price. Video 1

Watch on YouTube Video 2

Watch on YouTube

Words to know (recap)

Watch the videos above first, then use this table to lock in vocabulary. Need more depth? See Options Basics.

Term	Plain meaning
Premium	Money you collect when you sell an option
Put	Option tied to selling stock at a set price
Call	Option tied to buying stock at a set price
Strike	The price in the option contract (e.g. $400)
Assignment	You must buy or sell the stock because the option was exercised
Cash-secured put	You sell a put and keep enough cash in your account to buy 100 shares if assigned
Covered call	You own 100 shares and sell a call against them
Called away	Your shares are sold at the call strike because the option was exercised
Expire worthless (OTM)	Option ends with no exercise—you keep the premium

Before you continue

You should understand from Options Basics:

What calls and puts are
That 1 option contract = 100 shares
That selling options can lead to assignment
That you need enough cash if you sell cash-secured puts

If any of that is new, finish Foundations first.

Three ideas to keep

Only wheel stocks you would own. If you would panic selling shares in a drop, do not sell the put.
Premium is payment for risk. Higher premium does not mean “safe.”
Covered calls limit upside. If the stock soars past your call strike, you may sell and miss further gains—you were paid premium to accept that.

Finish the videos and checkpoint on this page first. Screening stocks, the Wheel page, and managing open trades come next in the track—you do not need advanced chart topics here.

Main risks (simple)

Risk	What it means
Stock falls after you buy shares	You own stock worth less than you paid—you still decide hold vs sell
Stock rises past your call strike	Shares may be sold (“called away”)—that can be a normal outcome, not always a mistake
Hard to buy or sell the option	Wide spreads and low volume make entries and exits costly
Too much money in one stock	One bad move can wipe out months of small premiums

The next pages show how to screen stocks and what to do after you are in a trade.

What comes next

Pick stocks you would own
        ↓
Compare puts on BigDipperOptions
        ↓
Trade at your broker with live prices
        ↓
Manage: close early, roll, or take assignment

Checkpoint

I can describe the wheel: put → maybe own stock → call → maybe sell stock → put again
I would not sell a put on a stock I refuse to own
I know one contract = about 100 shares of exposure

Next: Module 2 — Selecting candidates

​What is the wheel?

​The two phases

​Phase A — Cash-secured puts (videos)

​Phase B — Covered calls (videos)

​Words to know (recap)

​Before you continue

​Three ideas to keep

​Main risks (simple)

​What comes next

​Checkpoint

What is the wheel?

The two phases

Phase A — Cash-secured puts (videos)

Phase B — Covered calls (videos)

Words to know (recap)

Before you continue

Three ideas to keep

Main risks (simple)

What comes next

Checkpoint