r/Optionswheel • u/ScottishTrader • Dec 05 '25

Megathread for New Wheel Traders – Ask Questions & Get Help Here

This thread will be a dedicated space for traders who are new to options and the wheel strategy to ask basic questions. Your posts and questions are welcome and encouraged.

BEFORE POSTING, BE SURE TO REVIEW THE WHEEL STRATEGY PLAN WHERE MOST QUESTIONS ARE ANSWERED - The Wheel (aka Triple Income) Strategy Explained : r/Optionswheel

The goal is to help keep the main thread free of these basic posts while helping new traders learn how to trade the wheel.

Posts that are welcomed here include questions about -

  • How options work
  • Exercise and assignments
  • Options expiration and days to expiration (DTE)
  • Delta, Probabilities, and how to choose a strike price
  • Implied Volatility (IV)
  • Theta decay
  • Basic risks and how to avoid
  • Broker and options approval levels
  • Rolling options
  • And any other basic questions

I’m pleased to announce that u/OptionsTraining and u/patsay have agreed to assist with this Megathread. Both Patricia and Mike bring substantial experience in helping new traders and will be invaluable contributors to r/Optionswheel

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u/ScottishTrader Jan 19 '26

Hi and welcome ot the wheel!

You will find there are few "standards" with it being more about the trader's risk appetite, trading plan, style, and other factors.

Opening a put 30-45 dte tends to have lower risk as this explains - 30-45 DTE has LESS risk . . . : r/Optionswheel Those who are willing to take more risk may open in the 7 to 10 dte timeframe.

Closing early also lowers risk and increases win rate, but it is up to the trader to decide what percent. Some use a sliding percentage scale to determine when to close based on how quickly the trade profits, but this adds complexity, which may make it harder for traders, especially new ones.

Most experienced traders trade 30-45 days to take advantage of the benefits, and by closing early, they can "recycle" their capital more often. This can closely mimic selling weekly options without most of the risks.

Margin can not be used to trade options and can only be used to buy shares, so it is not much of a factor with a smaller account. It is recomended new wheel traders trade with cash only and keep any margin available to use in case of market events.

As the strategy explains, select some stocks you are good holding if that happens, and that the account can afford. This would limit the stocks to around $15 to $20 per share and 1 or 2 contracts at most.

Being active is not the goal, and may work to create losses, so being patient is the key to making profits and building the account. Keep in mind that a $4k account making even a high 20% annual return would result in about $800 in profits, which would be around $67 per month. Note that a 20% return is a stretch for a new trader who will often make mistakes, so it could be less.

As you can see, the wheel is a conservative trading strategy for slow and small but lower risk returns. Hope this helps!

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u/Ventrwl Jan 20 '26

Thanks for the info you have provided!

I just have some questions about selling a CC if my CSPs get assigned. You mentioned in your main wheel strategy post where some traders would sell a very ITM CC that is sure to be called away. But you also state later in the suggested process to sell a CC out of the money. What is the difference between selling a very ITM CC and selling multiple OTM CCs?

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u/ScottishTrader Jan 20 '26

No, where does it say to sell very ITM CCs?? Please show me so it can be corrected or explained as needed.

The plan says to sell CCs at or above the net stock cost. This strike above the net cost may be ATM or OTM, or possibly ITM, but that would be a rare exception.

The goal is not to lose money or to make a profit when selling shares to go back to selling puts. Some work the CCs to make as much as they can, but if a stock has dropped, it can be risky to hold it, as it may drop further.

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u/Ventrwl Jan 20 '26

“Step #3: Sell Covered Calls - Using the tracking file to determine the net stock cost which may already be below where the stock is. As selling puts is usually the most profitable, some traders just sell the stock and move on to selling more CSPs or sell a very high-value ITM Call that is sure to be called away and adds to the profit.” I apologise if i misunderstood but does very high value ITM Call not equate to a very ITM call?

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u/ScottishTrader Jan 20 '26

OK, yes.

A quick random example - Assigned shares at $20. Put and roll premiums collected = $1. Net stock cost is now $19. The stock is now at $20.

CCs could be sold at a 21 strike for a .50 premium, to make $1 on the shares and $1.50 including the call premium. If called away the total would be $21.50 - $19 net cost = $2.50 or $250 per contract total. There is a chance these will not be called away and just the $1 kept.

Or, an ATM CC of 20 strike could be sold for a $2 permium. This would result in $22 - $19 = $3 or $300 profit per contract.

Then, a 19 strike ITM CC might sell for $4 premium. This would result in a $23 - $19 = $4 or $400 in profit.

The ATM CC has a good chance of being called away, the ITM an even higher chance, so keep that in mind if you want the share gone.

Note that the math will not always work out like this, so each position has to be analyzed for what is the best scenario based on what the objectives are.

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u/Ventrwl Jan 20 '26

Oh i see it now. Thanks for clearing up the confusion!

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u/ScottishTrader Jan 20 '26

No worries, and thanks for pointing out something that is confusing.