The options wheel strategy is an income producing strategy involving selling put options, potentially owning stock, and selling covered calls until the shares are called away or the position is closed. The wheel is an increasingly popular strategy for investors that want to generate income before and possibly during stock ownership.
The wheel's primary objective is not to own stock. The strategy's goal is to consistently take in credit via selling short put options. However, selling short put options prior to owning stock reduces the position’s cost basis throughout its duration.
The wheel strategy can be thought of as an active approach to passive investing that allows investors to generate consistent income. It is perfect for stock investors looking for a simple transition to options trading.
The options wheel strategy consists of two main components as shown in attached. @Tiger_comments @MillionaireTiger @CaptainTiger
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- BirdieO·07-05TOPGreat breakdown of the options wheel strategy1Report
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