Generate consistent income by systematically selling options on stocks you want to own. The "triple income strategy" that combines cash-secured puts and covered calls.
The wheel strategy (sometimes called the "triple income strategy") is a systematic approach to options trading that cycles between two phases, generating income at each step. On this website, I trade the wheel strategy and share my real results so you can see exactly how it performs.
Collect premium while waiting to buy stock at your target price
If the stock drops, you buy 100 shares at the strike price
Collect more premium while waiting to sell at your target price
The wheel begins with selling a put option on a stock you'd be willing to own. "Cash-secured" means you have enough cash in your account to buy the stock if the option is exercised.
The key insight: You're essentially getting paid to wait for a stock to drop to a price you'd like to buy it at anyway.
If you're assigned the stock, you immediately begin selling covered calls against your position:
When your shares are called away, you've made money on the stock appreciation plus all the premium you collected. Then you start the wheel over again!
For a detailed breakdown, read my complete guide: Mastering the Options Wheel Strategy.
The wheel generates income at multiple points throughout the cycle:
Collected when selling cash-secured puts
Collected when selling covered calls
Earned while holding the stock
Every premium you collect reduces your effective cost basis. If you're assigned at $50 after collecting $2 in put premium, your actual cost basis is $48.
The strategy removes emotion from trading by giving you clear rules: sell puts at prices you'd buy, sell calls at prices you'd sell. No more agonizing over timing.
While the wheel works best in sideways or slightly bullish markets, it can be adapted to most conditions. The key is choosing the right underlying stocks.
Once you understand the mechanics, the wheel becomes a repeatable process. It's easy to follow and doesn't require constant market monitoring.
Not all stocks are suitable for the wheel strategy. The best candidates share these characteristics:
You must be comfortable holding long-term if assigned
High volume ensures tight bid-ask spreads on options
Enough to generate attractive premiums, but not unpredictable
Profitable companies with solid balance sheets
Many traders run the wheel on large-cap stocks and ETFs:
I believe in full transparency. I share my actual wheel strategy trades—every win, loss, and lesson learned—so you can see how the strategy performs in real market conditions.
Real trades from a $50,000 account with full transparency on performance.
I also send real-time alerts when I place wheel strategy trades. Read more: Wheel Strategy Real-Time Alerts Now Available.
While the wheel has many advantages, it's not risk-free. Understanding the risks is crucial:
If a stock drops significantly after you're assigned, you could be holding shares at a loss for an extended period. The premiums collected may not fully offset a major decline.
If a stock you're wheeling suddenly surges, you might miss most of the upside because your shares get called away at your strike price.
Cash-secured puts require having the capital to buy 100 shares. A $100 stock requires $10,000 in cash per contract. This ties up capital.
While rare, early assignment can happen. Be prepared to have shares called away before expiration, especially around dividend dates.
Both strategies involve selling puts, but they differ significantly. I trade both strategies—each has its place in a well-rounded portfolio.
| Factor | Wheel Strategy | Put Credit Spreads |
|---|---|---|
| Goal | Income + potential stock ownership | Pure income generation |
| Risk Profile | Owning stock (significant capital at risk) | Limited to spread width minus credit |
| Capital Required | Full cash to buy 100 shares | Only margin for spread width |
| Best For | Investors who want to own stocks | Traders who want defined risk |
| Market Outlook | Bullish to sideways | Bullish to neutral |
Want defined risk and lower capital requirements? Put credit spreads might be a better fit for your trading style.
Read the Put Credit Spreads Guide →To trade the wheel successfully, you need to understand these foundational concepts:
Ready to start trading the wheel strategy? Here's my recommended approach:
Understand put options and call options thoroughly before starting.
Identify 3-5 stocks you'd genuinely want to own for the long term. Quality matters more than quantity.
Ensure you have the cash to cover potential assignment on at least one stock. A $50 stock needs $5,000 per contract.
Practice the mechanics before risking real money. Get comfortable with entries, adjustments, and exits.
Begin with one underlying and one contract. Scale up only after you've proven your process works.
Study how the strategy performs at the results page. Learn from both wins and losses.
Get comprehensive video lessons, real-time trade alerts, and direct access to ask questions about your trades.