How to Trade the Wheel Strategy 

Spreadsheet: docs.google.com/spreadsheets/d/1RXNUa8-n6r06CdTCt5PxWqoMp6q1ZSZJGEicoP-pGeA/copy#gid=648757628 Like it? Support the channel by grabbing some free stocks in the description! There are a few parts where the audio cuts out. Sorry! Nothing of importance is missing. In addition, I advise that you only trade this in a tax-protected account like an IRA. Your premiums will get destroyed when tax season comes around if you trade the wheel in an individual brokerage account. Robinhood is releasing those now which you should take advantage of if you use RH. Max those contributions baby.

You have a natural talent for teaching this stuff and having it make sense so easily. Thank you for your videos!

You can sell your covered calls at a strike a little below your cost basis if the premium of the call is big enough to cover the difference

I don’t comment much, however I wanted to tell you how much I enjoyed your explanation. I have been researching options trading and it seems to me that everyone want to give you just enough information then throws in a sales pitch to get the rest of the strategy. Thank you!

DUDE!! I love your no fluff, all info way of explaining to us. You are a rock star. Please dont change!! Keep teaching, you are wonderful!!

I absolutely promise anyone, Ive learned more the first 3.5 minutes of this video than over a year of research. Like I know what he's talking about but the simplicity is beautifully done and makes total sense. Time to go loose all my money on the wheel strat 😂😂👊

Mind blowing 🤯 teaching skills 👌

When you asked "What is the first step" and said "You, DONUT in the front, I literally thought you were talking directly to me LOL. Cool strategy, thanks for this video!

In the top of the spreadsheet I edited it to have a link to this video so if I forget how to do something I can just click the link and follow this video. You may want to edit yours to come that way when people download it. Thank you so much making your content!

Adam, you are an amazing teacher, you make this so easy to understand for me. I started knowing nothing about options a few months ago, and now I feel that I am semi competent. I recently opened a position and am using this wheel strategy. It's great! Thanks!

Your explanation of delta really drove it home for me. Thanks for publishing the SS! For anyone adopting this like I am without the first step of using a "CSP" to acquire their shares (I already had them), then you have to enter "100" in N9 for the sheet to work (or enter the total number of shares you own & adjust it manually if/when shares get called away on assignment of covered calls). Keep the videos coming! Also, a potentially important point here: at about 20:30 you're talking about the potential for lower premiums when selling options with lower delta, HOWEVER, you fail to mention that as delta increases so does the premium (and hence a lower cost basis). And, if one is confident the underlying will go down, then selling for more premium might be advisable - the preference for the .3 delta (and it's implied risk of assignment) is a personal one, but you don't say that. Personally, I consider covered call premiums to be very similar to collecting rent - using someone else's $ to pay the mortgage. In the following example it will take ~7.5 months for the premiums to pay the entire cost basis back. Ex: I bought XYZ for a total cost basis of $530.20; sold a (ITM) covered call at strike price $5 for $.70. If it gets exercised (and it almost did 2 days later when XYZ traded as high as $5.86) I make $39.10 on a $530.20 investment (7.37%) - just remember you may have commissions and fees on options trades you don't have on stock trades (I do). I could have rolled my CC for a slight loss and increased my CB, but was confident it would go back down... it has so far.

I know why you say to sell with 30 - 45 DTE, but why not just sell a weekly every week over the same 4-6 weeks and bring in 1.5-3 times as much premium for the same time? Plus you get higher theta the whole time.

If you wanted to do the wheel strategy as your primary trading strategy, would you dedicate your entire portfolio to it, or maybe like 75%, then use the other 25% for whatever?

This is a great explanation, but I think it presents the wheel strategy as needlessly complex. It’s really a 4-step process, because there is no need to roll forward.

Question.. if i am doing a spreadsheet. Should u be doing one for each security that i am wheeling?

This is exactly where my brain went after watching the selling csp video. I originally was just going to do covered calls but this seems much more useful

Adam you have literally changed my life with these videos. I am confidently trading the wheel strategy every week! Thank you so much for all the amazing videos!!!

I definitely found my favorite stock market strategy with the wheel.

I’ve been running the wheel strat for almost 6 months. Yielded 27% in profit (premiums). I’m a little iffy about selling calls at the adjusted cost strike price- you are wiping away your gains. I prefer to keep rolling and maneuvering and even averaging down my price (via ITM puts!) to get out of crappy positions.

Jezz we are so fortunate nobody teach this things at school lol Imagine the competition

If you looking at the 30-45 days to expiration why not instead write 4-6 weekly options instead. Since if you add up all the premium/day, it would always be more on several weekly's than a single longer term option

Just starting to learn about options and I'm so glad to have come across your videos. I like the fact that you get straight to the point and explain it all in simple terms which makes it easy to understand. Thank you so much for sharing your knowledge. My prayers for God's continued blessings over your life:)

New subscriber to your channel! Great content! This strategy amazing! I just started doing the options wheel today on a larger scale. I made $1700 in premiums from just $12K collateral. That is 14% ROI. My collateral will be released Fri 9/10/21 so then I can rinse and repeat.

damn and people are charging money to teach this strat, thanks again boss man

One thing I found out is the formula used for the CC price on the spreadsheet meets to be adjusted by how many shares you’ve been assigned. I’ve been running the wheel for about 2 months now. Have avoided assignment until this week. Had 4 CSP’s ITM. After entering the debit it was saying I needed to sell covered calls for literally 4 times more than what I paid for them. You need to go in and adjust the formula for how many shares you’ve been assigned.

I was literally just researching this and I happened to find this video before it's even properly up, dang

(Try to sell calls above -22.50)@19:13 -> (Try to sell calls above 22.50)@19:22 -> ("Sell above $21.50")@20:20 What did I miss here? Killer video, you're an excellent teacher.

Thanks for this video, was super helpful and informative. One thing I’m a little confused on is why you would prefer to sell puts 30-45 days out. I understand theta decay ramps up, but doesnt it ramp up throughout the contract? Wouldnt selling weekly puts be better as 1) there’s less time for the option to become in the money and 2) you wont have your collateral locked up as long and can continue to start step 1 over and over. Any help would be appreciated, thanks!

I’m really surprised anyone even talks about the wheel strategy. It can destroy you if the market goes south. Just my two cents. Thank you for the info

Traders should avoid attempting to predict trend reversals, or even worse, I believe there is more to this market than we currently understand. When people are losing, they don't endeavor to increase their average. Using expert mrs Amber Rebecca assistance, I've made almost 9.5 btc on a 2 btc Trade capital over the last 8 months.

Can you do the wheel strategy effectively without rolling you cc and csp?

Hey, you say premium received from csp and covered calls reduce your cost basis, but in your example you don’t add the premium from the covered call to reduced the cost basis. $500 premium reduces cost basis from $25 per share to $20 per share. Selling a covered call at $19 strike price will also bring in a premium to further reduce your cost basis from $20 but you make no mention of that, you simply keep the cost basis at $20. I get that choosing a lower strike price to sell the covered call will run the risk of making a loss or just merely breaking even, but it’d be more coherent if you didn’t exclude that premium.

Not a bad strategy however as with everything there is a tradeoff in terms of risk related to the underlying selection. If assignment occurres and the underlying keeps going lower the covered calls will be useless and a significant loss is possible if the UL does not recover. Also, even though it is a cash-secured put and when opening the initial position one might think they "want" the stock that attitude can and will likely change very fast if suddenly the UL dives lower due to either a specific situation or general market malaise as this strategy has very minimal downside protection. Therefore UL selection both in terms of quality and trading range position as well as general market condition should be carefully considered.

Is it best to do this strategy with a stock that: 1. Is extremely stable in price with small tight fluctuations. 2. Stable in price with larger fluctuations. 3. Steady gaining (like Microsoft or Google) 4. Steady declining

I'm not sure I completely agree that you never want to sell a Covered Call below your cost basis, not only can you use the loss for tax purposes, but the premium can sometimes make it an overall gain on the position.

You explained this pretty well. Lately, I’ve been less dependent on my 9,5 job to cater to my needs as my investments in the options market cover my lifestyle. It's been a source of passive income for me.

Good Wheels Vid. I do kind of the same, Except don't roll. Do weekly or few weeks depending. Once I hit 76% profit. BTC & keep cash liquid. Find another Put. Haven't got assigned yet. Like to keep buying power freedom for more puts. Markets been crazy. Thinking about trying vertical put spreads. Spread out over 10 points. Can't stay away from the juicy premiums. Hope I can try different strategies... Because I can't help to buy back before assignment. Even though the cash covered puts. Just worried we're in a bubble

I love your content. I started to trade options based on what I learned from your channel. Thanks for providing so much value!

Glad to see you're well enough to respond to recent comments, still vids too. Hope you keep getting better. I've shared this sheet with someone new to trading this last week. I've been trading (holding selling CC mostly), but am just starting the wheel. Am confused about "commission per contract" box "N10" and how/why it effects column "L" the way it does ? All the way down. As it stands, I don't put anything there, because, it fills in all of column "L", which then adds to debits box "O2" which have not happened yet. It "M9" also says "

Dude! This is what I’ve been waiting for. I’ve watched all your videos and have already started trading. You are so much more entertaining and educational than the other stock youtubers. Keep up the awesome man. Thank you!

What if you sell a PUT contract on say, APPLE (AAPL), at the $140 strike price, but the stock falls through, all the way down to $120? Remember, you can't force the market to assign to you immediately. The only guaranteed assignment is at expiration. More damage can happen along the way. Now you can be forced to pay $140 for a $120 stock. Painful.

I have 100 shares of something. I sold my first (share secured) call. I learned in this video, I don't have to wait for it to expire. I can buy to close it. Wow, mind blown!

24:52 voice cuts out. I noticed that in several of your videos so just informing you. Besides that, your videos are EXCELLENT ! They helped me understand calls, covered calls, puts, chash secured puts and roll over and now the wheel strategy perfectly. You made it very easy to understand like no one else can. Thanks and good bless.

You’re a good man! Thanks for this INVALUABLE knowledge.

By far, this is the best explanation of the wheel strategy

Just wanted to chime in and say thanks for explaining things with such clarity. I thought it might be a good idea to have a commissions column in the excel spreadsheet because they do add up and I think if people are already taking the time to track their cost basis what is adding another number going to do.

I watched your videos a year ago and my brain turned to mush, but now, I am starting to understand and this is blowing my mind. Thanks for the videos!

I'm just here for that T-Shirt!!! Let's go!!

I cannot believe this video doesnt have millions of views. This has helped me tremendously...

What would you say about a simplified wheel strategy for beginners to this strategy? If you remove rolling your positions and let positions close themselves it could simplify the strategy and allow beginners to familiarize themselves with the strategy and create the good habits. Later they can look to build on their knowledge basis and add in rolling positions. Thoughts?

You know you're a good person when you know you get something out of webull if people sign up but use it as a choice donation to support the channel rather than an AD.

GREAT CONTENT. I'm an older person getting into options trading. Absolutely love this fantastic teaching. Thank you 🙏🏼

Would you consider the wheel strategy the easiest options strategy to manage overall? I'm starting a 9-5 and I don't wanna give up options but I don't see many opportunities to check positions during work so it'll all have to be automated

Hey, man. I love your videos, but I was hoping I could ask a question about your Wheel Strategy. I was thinking about doing the Wheel Strategy, but on a weekly basis. My plan was to sell cash covered puts on a weekly basis, roll out when possible, and then essentially repeat the process with covered calls when I'm eventually assigned. However, I have heard doing cash covered puts and covered calls on a weekly basis is ill advised. Is there a reason for this? I understand time decay is not as powerful, but based on the pure price of premium, I can potentially make more money if I sell contracts for premium on a weekly basis rather than a monthly basis.

Thank you so much. This is immensely helpful, and you've made such a elaborate process very digestible even for a beginner, so you're a great educator. That being said, I was wondering if I could follow up and ask 2 related questions: 1 - Would you ever want to go above 100 shares? Say, I own 5000 shares of a stock that costs around $10. Would I ever want to wheel with say a certain percentage of that position, like 500 shares just to get more returns? 2 - What happens when you sell a covered put, your shares get locked up for 30 days, and the stock goes up? Would you now have missed out on those gains until your put contract is over? If so, do you often find that the wheeling strategy is more profitable? Thanks again!

Pattern recognition, stock picking, when to buy or sell, entry and exit points? A few must knows for every newbie before getting around to placing a trade, Don't rush the process. I started profiting from the market when I discovered a better and more effective way to trade and make money. I'll be on to seven figures by years end. Kudos

Hey so I understand we never wanna sell a covered call under our cost basis, in your example $20 was cost and the $19 covered call wouldn’t work. But what if the premium/credit received for selling that call was let’s say $3.00. Wouldn’t our cost basis now be $17 per share and thus making the $19 covered call ok? Because we would still be above our cost basis? Sorry if I missed or understood anything but I’m just really curious about my above example. Thanks!

Rewatched this a couple times. I am curious what you look for on the stock charts to determine if the wheel is a worthwhile strategy to run. Your videos break down options trading very simply, I appreciate it!

This video is gold! I keep coming back to it and learning more each time. With all the mania going on with AMC, I'm going to be running a modified version of the wheel, I started off with buying the shares first since I had a high expectancy on it going up in price and it totally did go up in price, by a lot, so when entering the info on the spreadsheet that you shared (thanks a lot btw) I'm starting off with buy to open 100 shares of AMC at 27.80 instead of a bto CSP and I believe it was the smart move because AMC as of right now is hovering around $40, I had a covered call on it at $35 that I just rolled to $70 with 79 days to expiration.

I've been doing this for years. I didn't know it had a name. I call it my "windshield wiper" strategy.

Is the wheel strategy still good with a shorter time frame ie: 1 week out?!?

You've made learning options super easy. Thank you! How do you fill out the spreadsheet if you're running more than one wheel strategy at once? You may have multiple actions in between getting assigned or closing your position.

nice video, but where are you getting $5.00 credit on $25.00 underlying with 30-45 DTE with a 30 Delta? thanks

Hey, thats a pretty cool shirt.

The downside of running the wheel is that potentially you'd be better off just owning the stock correct? So does it make sense to own 100 shares of a stock before running the wheel, so that you're hedged either way? Things are flat, you collect premium. Things are good your stock appreciates. Things are bad you're fuct, so maybe buy a LEAPs Put? (New to all this)

Thank you. Learning a lot. Do you have any suggested resources for understanding taxes with gains and potentially limiting them? Like transferring into retirement as an example?

Okay only question i have, not sure if i missed this in the video or any of the last ones, but on cc when assigned do you keep premium? thank you

Thank you. I took accounting years ago. The thing that infuriates me with options is how do you know if you have made or lost money? That spreadsheet is exactly what I needed to try trading live options! Thank you so much! You got a new sub, too :)

what are the pitfalls and most common mistakes in this strategy? is it possible to lose all your money?

was waiting for this, good stuff!! how would you manage/protect against the situation where the shares you get assigned from a CSP fall to the point where you're not able to sell above your cost basis for much of a premium? i.e. how to not be left bagholding lol, and is this something that happens often at all when employing this strategy

This strategy makes so much sense. Hopefully more equity investors will see the light and jump over to options.

Why not sell with even shorter time periods... 2 weeks for example Also, bear in mind, the IRS has a different view of what cost basis is.

Thanks I watched a number of videos trying to explain the wheel tonight and yours was the most helpful

“Just have fun” yesss

Traded stocks and loved it. Lost money when I was younger chasing cheap stuff. But never had the money to get into options. Now, I can save the money while learning. Great channel!

I'm curious how you learned all of this?

Q: If I’m running the wheel with 200 shares of the same stock I’m curious about your thoughts to running them staggered. IE having both a CC and CSP at the same time. On one hand it’s more to juggle but on the other it opens up some choices and only half your collateral is possibly tied up at one point in time.

Bruh so many bots in the comments

I use this strategy to accumulate shares. As soon as I execute selling a put or a call, I use the premium to buy more shares.

I'm a fan of my weekly premiums..30 to 45 days out is no go for me

What if after beeing assigned for CSP , stock keeps plumbing and CC above your cost basis are very OTM. you exit the strategy selling the stock and taking loss?

I assume this strategy works the best with highly liquid option stocks.

Great video on a subject that can be hard to digest. You made it very easy to follow and understand. Thank you

You are awesome....so normal and so natural and so informative....keep it up!

The problem I have seen with this strategy is actually finding enough 'good' stocks that I'd want to own and that have an affordable price for cash secured puts. Lots of the popular stocks / ETF's that have good option premiums and volume trade for several hundred dollars a share, which is too high for cash secured puts (how many people can afford 100 shares of Apple as part of a well diversified portfolio for example?). The other problem with this strategy, is that you have to feel comfortable owning volatile stocks. You're not going to get any worthwhile premium selling puts against a safe, dividend paying company like Coca Cola etc. You're ultimately taking a risk then to get a decent premium against a more volatile stock like Virgin Galactic or Draft Kings for example. These stocks could tank at any time and you will be stuck with an unrealised loss for a very long time if that happens.

I've watched your options guides, but I have still a bit of a hard time grasping why it's a bad thing to get assigned. Say you sold a CSP ATM and the option shortly went ITM and got assigned, wouldn't that just mean you'd just get to move to the next step faster? The way I see it, you'd get to collect your premiums faster, if you sold both CSP and CC ATM. Though considering cost-basis, it might be better to sell the CC OTM, maybe? Then again, I've never done options before, so maybe I just need to see for myself how the numbers really play out.

Hey thats an amazing shirt where did you get it?

One thing I would recommend on covered calls. If you think stock will finish week above your cost basis sell that covered call at the price you think it will hit.

My advice to new investors: Buy good companies stocks and hold them as long as they are good companies. Just do this and ignore the forecasts and market views which are at best entertaining but completely useless.

Man, you blew out the roof on this one! such a wonderful job. You are smart! thank you so much.

While you're collecting all this chump change from selling puts and calls, there's the very real possibility of loss in value of the stock after you acquire it via put or loss in value of the stock while it's covering a call. At least this "wheel" strategy isn't going to blow up your account or your life savings like a credit spread where only one leg gets assigned during after-hours trading. (Assignment during after-hours trading can happen any day that options trade, not just on expiration day.)

Im amazed by this video! And here I thought I was ready to venture into options. I struggled to say I understood any of it. And he did a great job, but I need way more experience to act on this lessons. Sticking to buy and hold for now lol

Nice video , Stock investment is profitable everyday and investors are making good profits but its never too late to invest in stock

The only way you loose money is when you are assigned in CSP and the stock price goes down dramatically.. Coz your adjusted cost will be higer and it will get difficult to sell cc for that adjusted price...

Take a shot for every time he says “cost basis.”

Thanks again bro! Really appreciate how in depth you go. No one has ever actually laid out the steps and explored what's in each step. Some steps take like 1 second but can contain so much! No one offers spreadsheets. Thanks for giving back! Blessings!

OMG NOO!!!! There is a small piece of bad advice in this video, please make your viewers aware of this, as it is crucial. The "cost basis" is figured for ZERO profit. Let me explain, if you sell CSP for 2, then roll for 0.50, then get assigned at 25, your cost basis is, in fact, 22.50...HOWEVER, if you sell a CC at 23 because "it has to be above your cost basis" then you are reducing your profit to 0.50 (plus whatever you will make on the CC) and you lose the 2.00 from the initial CSP. Let's run through a scenario with your spreadsheet: CSP 2.00, BTC 2.50 CSP 3.00, Assigned 25.00 (cost basis 22.50) CC23 1.00, BTC 0.05 (cost basis 21.55, let's pretend stock keeps falling) CC22 1.00, BTC 0.10 (cost basis 20.65) CC21 0.80, BTC 0.10 (cost basis 19.95) CC20 0.50, Assigned 20.00 Even though you sold 8.30 worth of assets and only incurred 2.50 in liabilities, you bought shares at 25 and sold at 20, taking a 5.00 loss. Your total profit is only 0.55, which is the difference between your final cost basis (19.95) and your final CC strike (20) plus your final CC price (0.50). ALL of your other work is negated because your calculation doesn't take ANY money out for a "rake" (profit to your pocket for the transaction). Also, N7 calculation is assuming 100 shares, which isn't a good thing when you are allowing any number of shares in the sheet in other areas, which can confuse new people. Personally, I prefer to sell the same strike price (or higher) that I was assigned when the CSP hit, regardless of cost basis. I will only sell as early as possible, no more than 6 months away, and it has to return a minimum of 0.025% of the strike per day I have to hold (9%+ APR). If I can't, then I will look to do a call-spread reduction factor to get out of the position for the same profit potential. For example: I'm assigned 100 shares of F at $10, nothing looks promising at 10 strike for Calls. If I sell the 8/9 Call spread, I can collect $21, and if the stock goes up, I sell however many shares to make up the difference of the loss (so if it goes to 8.50, then I "lose" $29, so I sell 4 shares to collect 34). I keep selling spreads until I can get rid of the position entirely. This is a rarity though, usually the first time I sell a spread, the price normalizes back up and I close the spread and sell a CC further out and at the proper value for just a pinch.

When doing the wheel, how far out do you choose? 1week out? 2week 1month?

This seems like a strat for ppl with a larger account. That stinks. Good info though!

Yo I just noticed your exceptional sound editing! When talking to the camera with mic, screen and face in shot, the sound is a roomy sound. When it zooms on the screen for detail explanations, the sound gets "closer", in effect. Nice touch!