Watch a live simulation trade the wheel strategy in real time - selling puts, getting assigned, selling calls, and collecting premium cycle after cycle. Then build your own scenarios with the calculator.
A simple, step-by-step strategy to generate steady income from stocks you actually want to own
Instead of buying a stock right away at today's price, you make an agreement to buy it later at a discounted price. You get paid an upfront cash bonus (called a premium) just for making this promise. You just need to keep enough cash in your account to buy the shares if the price drops to your discount level.
If the stock's price drops to your agreed-upon discount price by a specific date, you are assigned the shares. This is actually exactly what you wanted! Because you already collected that upfront cash bonus in Phase 1, your true out-of-pocket cost is even lower than the stock's current price.
Now that you own 100 shares, you can act like a landlord. You make an agreement to sell your shares at a higher price in the future (this is called a covered call). Once again, you are paid an upfront cash bonus for making this promise! If the stock stays below that higher target price, you simply keep your shares and the cash bonus.
If the stock goes up and hits your higher target price, your shares are automatically sold. You keep the profit from selling the stock, plus all the cash bonuses you collected along the way. Now, your money is freed up, and you start all over again at Phase 1 to keep the wheel spinning.
No strategy is risk-free. If the stock you buy suddenly crashes and stays down for a long time, you are stuck holding shares that are losing value. That's why the golden rule of the Wheel is to only use this strategy on high-quality companies you wouldn't mind holding for years. This strategy doesn't eliminate the risk of the stock market dropping, but it does soften the blow because of the extra cash you collect.
Rule #1: Only use stocks you'd happily hold for years if the price drops. Never chase high cash bonuses on garbage, trendy companies that might go bankrupt.
Earnings reports cause wild, unpredictable price swings. Check the calendar and avoid making agreements that expire the week a company announces its earnings.
Stocks that are too cheap don't pay you enough premium to make it worth your time. Stocks that are too expensive tie up too much of your cash, since you have to buy in batches of 100 shares.
Look for established companies (over $2 billion in size). They are much easier to trade, less volatile, and less likely to disappear overnight compared to penny stocks.
You want a stock that moves around just enough to pay you a good cash bonus (often called "Implied Volatility" between 25-60%), but not so wild that it feels like pulling a slot machine lever.
This strategy works best when a stock is slowly going up over time, or just moving sideways. A stock in a rapid, continuous nosedive will cause you to lose money.
Bars accumulate as cycles complete · hover for details
Starting: $10,000 ·
Every option sale, expiration, assignment, and call-away event - with plain-English explanations.
Enter your own numbers and see the exact P&L at expiration for each strategy phase. We encourage using this before trying the simulator!
P&L at expiration - premium is yours to keep
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