Wheel Strategy
The wheel strategy (also called the triple income strategy) is a systematic approach to generating income by selling cash-secured puts on stocks you want to own, then selling covered calls if assigned. It combines two of the safest options strategies into a repeating cycle.
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How It Works
- 1
Select a stock you would be happy owning at a lower price
- 2
Sell cash-secured puts at a strike price you are comfortable buying at (typically 5-10% below current price)
- 3
If the put expires worthless, keep the premium and repeat
- 4
If assigned (stock drops below strike), you now own shares at a discount
- 5
Sell covered calls against your shares to generate additional income until called away
Best For
Related Guides
The Wheel Strategy: How It Works, Risks, and Examples
Learn how the options wheel strategy cycles from cash-secured puts to covered calls, with payoff examples, assignment mechanics, stock selection, and risks.
Covered Call Strategy: How to Generate Income from Stocks You Already Own
Learn how to write covered calls to generate monthly income from stocks you already own. This complete guide covers strike selection, expiration timing, rolling, and when NOT to use covered calls.
Options Trading for Beginners: Everything You Need to Know in 2026
A complete beginner's guide to options trading. Learn about calls, puts, strike prices, expiration, the Greeks, basic strategies, and how to avoid the most common mistakes new options traders make.
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Frequently Asked Questions
What is the wheel strategy?
The wheel strategy is a systematic options income strategy: sell cash-secured puts → get assigned → sell covered calls → get called away → repeat. It generates income at every stage.
How much capital do you need for the wheel?
You need enough cash to buy 100 shares of the stock at the put strike price. For a $50 stock, that is $5,000 per contract. Lower-priced stocks or ETFs allow smaller accounts to participate.
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Important disclosures
Informational purposes only
Tradewink is published by Tradewink LLC, which is not a registered investment adviser, broker-dealer, commodity trading advisor, or financial planner. All data, signals, and analytics on this page are general, impersonal, and for informational purposes only. They do not constitute investment advice, financial advice, or a recommendation to buy or sell any security or other instrument.
Trading risk
Past performance does not guarantee future results. Trading involves substantial risk of loss, including the possibility of losing more than your initial investment. You are solely responsible for your own trading decisions.
Hypothetical & backtested results
These results are based on simulated or hypothetical performance results that have certain inherent limitations. Unlike the results shown in an actual performance record, these results do not represent actual trading. Also, because these trades have not actually been executed, these results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated or hypothetical trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to these being shown.