Systematic Income Through The Wheel Strategy

Generating monthly cash flow by selling options on quality stocks. No day trading, no speculation, just probability-based income generation.

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Monthly wheel performance updates • Position analysis • Risk management insights

What Is The Wheel?

The wheel strategy is a systematic approach to generating income from options. It's not about timing the market or picking winners—it's about collecting premium while positioning yourself to own quality stocks at a discount.

1

Sell Cash-Secured Puts

Sell puts on stocks you'd own anyway. You keep the premium whether or not you get assigned. If the stock drops below your strike, you buy shares at a discount.

2

Get Assigned → Own Shares

When assigned, you own shares at your chosen strike price (below market when you sold the put). You've already collected premium, so your cost basis is even lower.

3

Sell Covered Calls

Sell calls against your shares for additional income. If called away, you sell at profit. If not, keep the premium and repeat. Either outcome is profitable.

Repeat the cycle

I only run the wheel on stocks I'm comfortable owning long-term at the strike price. If I wouldn't buy the stock outright, I won't sell the put.

Why The Wheel?

Systematic

Rule-based, not emotional. Clear entry and exit criteria eliminate decision fatigue and behavioral mistakes.

Income-Focused

Premium collection every week or month. Consistent cash flow regardless of market direction.

Risk-Managed

Pre-defined position sizing and margin limits. No surprises, no margin calls, no blowing up accounts.

European-Friendly

Works with Interactive Brokers (IBKR). Manageable tax implications for Irish/EU investors.

Capital Efficient

Generate returns while holding quality stocks. Premium collection on top of potential appreciation.

Time Efficient

No day trading required. Weekly management, monthly adjustments. Perfect for builders with other priorities.

My Framework

Position Sizing Rules

  • Maximum position size per underlying (strictly enforced for diversification)
  • Only sell puts on stocks I'd buy outright at the strike price
  • Strike selection based on technical support levels, IV rank, and probability of profit
  • Cash-secured positions only—no naked exposure

Risk Management

  • Success metric: No margin calls. Ever.
  • Leverage limits strictly enforced (conservative portfolio margin usage)
  • Diversification across sectors—no concentration risk
  • Clear exit rules for position management and loss mitigation
  • Regular portfolio review and rebalancing

Stock Selection Criteria

  • Quality companies only: Strong balance sheets, proven business models
  • Fundamental strength—stocks I'd hold through a downturn
  • Sufficient liquidity for easy entry and exit
  • Strong options volume and tight bid-ask spreads
  • Reasonable implied volatility for premium collection

European Investor Perspective

As an Irish/European investor, I've structured this strategy to work within our regulatory and tax environment:

Platform

Interactive Brokers (IBKR) is the go-to for European options traders. Low commissions, solid platform, portfolio margin available.

Tax Considerations

Irish/EU tax implications require careful tracking. Premium timing, withholding taxes, and currency conversion all factor into returns.

Currency Risk

EUR/USD exposure is real. I track returns in both currencies and manage FX risk as part of the overall strategy.

Market Hours

The wheel works outside US market hours. Position management doesn't require being awake at 2:30 PM GMT for market open.

Performance Tracking

I track performance weekly but report quarterly in my premium newsletter. Targeting consistent monthly returns with strict risk controls.

Premium subscribers get detailed position analysis, entry/exit rationale, risk management insights, and quarterly performance reviews.

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Monthly wheel updates • Risk management frameworks • Position analysis

Helpful Tools for Investors

Position Sizing Calculator

Calculate safe position sizes for wheel strategy and options trading.

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Break-Even Calculator

Calculate profitability thresholds for positions and business decisions.

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Porter's Five Forces

Assess competitive dynamics and industry attractiveness.

Analyze Industry →

Disclaimer: This is educational content, not financial advice. Options trading involves substantial risk and is not suitable for all investors. Past performance does not guarantee future results. I am not a financial advisor—consult with qualified professionals before making investment decisions.