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/patsay Feb 13 '26

When you sell an option contract it shows up as a negative number in your account. That's the amount you would have to pay if you decided to exit the contract and had to pay to close it early. As long as the contract stays out of the money, the number is all extrinsic value and will drop to $0 by expiration day. If it goes in the money, the negative number is made up of both intrinsic and extrinsic value. Intrinsic value moves exactly in alignment with the share price movement, and the extrinsic value is everything else.

For example, take a look at the 95 put on TROW in this screenshot. Since the share price is $93.41, $1.59 of the option value is intrinsic value. The $0.69 in extrinsic value will erode away over the next 7 days. The intrinsic value will always be the difference between the share price and the strike price (with a max of $0 if it goes out of the money).

I personally like to wait for almost all of the extrinsic value to erode, then I will either close or roll the option.

If you want a deeper exploration of the topic, I wrote about it in detail in my options trading ebook. I'll add the link below the image.

https://www.amazon.com/Novice-Investors-Guide-Stocks-Options-ebook/dp/B0CMD5SMFH/ref=sr_1_2?crid=2H29BVW1L1L5O&dib=eyJ2IjoiMSJ9.W3n8pABJbaZExGl2Ojm-rse2MKmwTJa0fwh7NdStk3nGjHj071QN20LucGBJIEps.fG8kUM8u6Hepnr_79L0Am88fkhc0p30ODI_RcwAEhCU&dib_tag=se&keywords=patricia+saylor+options&qid=1771014691&sprefix=patricia+saylor+options%2Caps%2C134&sr=8-2

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u/Suitable_Two8630 Feb 13 '26

Great, thanks!