Trading term
What is Wheel strategy?
The wheel is an options strategy that loops: sell a cash-secured put, and if you're assigned the shares, sell covered calls on them until they're called away. Then sell puts again.
Step one is selling a put below the price, with cash set aside to buy the shares. If the put expires, you keep the premium and sell another. If you're assigned, you own the shares, so you sell a call above the price. When the shares are called away, you're back to selling puts.
Every month brings in a premium, which is why the wheel is sold as income. But a covered call pays off like a put at the same strike, so the wheel is short a put the whole time. It makes a little when the price holds or rises, and loses almost as much as the shares when they fall.
For example
Run on the S&P 500 every month from 1990 to 2026, selling options 2% from the price, the wheel made money in about 84% of months. $10,000 grew to about $157,000. Holding the index grew it to about $472,000.
Go hands-on in Premium
That's Wheel strategy in theory — it clicks when you read it on a live chart. Practise it hands-on in the TradeWize Premium Options track.
Explore Premium →Why it matters to you
The high win rate makes the wheel feel safe. It isn't: it gives up most of the big up months and keeps most of the big down ones.
⚠ Getting stuck after a crash
If you never sell a call below the price you paid, a big fall can leave you holding the shares for years, selling calls so far away they pay almost nothing.