> ## Documentation Index
> Fetch the complete documentation index at: https://docs.bigdipperoptions.com/llms.txt
> Use this file to discover all available pages before exploring further.
# Wheel Module 1 — The Wheel Strategy
> How the wheel strategy works: sell a put, maybe own the stock, sell a call, and repeat—with short CSP and covered-call videos.
**Learn** · **Wheel · Step 2 of 5** · [Learn home](/learn/overview) · **Prev:** [Wheel Learning Series](/learn/wheel-complete-guide) · **Next:** [Module 2 — Selecting candidates](/learn/wheel-module-2-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:
1. **Sell a cash-secured put** on a stock you would own
2. **If assigned** → you buy 100 shares per contract at the put strike
3. **Sell a covered call** on those shares
4. **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](https://www.youtube.com/watch?v=1sNkngMP4AM)
**Video 2**
[Watch on YouTube](https://www.youtube.com/watch?v=ndWEHAhCulM)
### 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](https://www.youtube.com/watch?v=FS-pzG_Oyto)
**Video 2**
[Watch on YouTube](https://youtu.be/Bk8OlPxF12E)
***
## Words to know (recap)
Watch the videos above first, then use this table to lock in vocabulary. Need more depth? See [Options Basics](/learn/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](/learn/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
1. **Only wheel stocks you would own.** If you would panic selling shares in a drop, do not sell the put.
2. **Premium is payment for risk.** Higher premium does not mean “safe.”
3. **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
```text theme={null}
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](/learn/wheel-module-2-candidates)
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