The Wheel Strategy Explained
Interactive step-by-step walkthrough — plug in your own numbers.
Sell a Cash-Secured Put
Sell AAPL $170.00 Put · 30 DTE · $2.55 premium
You sell a put option at your chosen strike price, collecting premium upfront. You must keep enough cash to buy 100 shares if assigned. The stock currently trades above your strike, so you're being paid to wait for a dip.
Assignment — You Own Shares
Assigned at $170.00 · Cost basis: $167.45
The stock dropped below your strike, so you're assigned 100 shares. But your effective cost basis is lower than the strike price because you already collected the put premium. Now you own shares and can generate more income by selling calls against them.
Sell a Covered Call
Sell AAPL $175.10 Call · 30 DTE · $2.10 premium
With 100 shares in hand, you sell a call option above your purchase price. This collects more premium and further reduces your cost basis to $165.35. If the stock rises to your call strike, your shares get called away at a profit.
Called Away — Cycle Complete
The wheel repeats — go back to Stage 1 and sell another cash-secured put.
Ready to run the wheel? Penny tracks every stage and tells you when to act.
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