The Wheel Strategy
Also called: wheel
A repeating income strategy: sell a cash-secured put, get assigned, sell covered calls, repeat.
The wheel is two trades on a loop. Sell a cash-secured put on a stock you want to own. If assigned, you now hold the shares, so you sell covered calls against them for more income. When the shares are called away at a profit, you are back to cash and start over. It wins small and often and loses rarely and large, so it only works on stocks you would be happy to hold.
For example
Sell a $20 put, get assigned at an effective $19.40, sell a $23 call for $70, get called away at $23, and you have collected premium at every step. Full walkthrough on our wheel guide.
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