The wheel, explained
How to pick a stock you would own
Before any strike, expiry or premium: the only question that decides whether the trade is sound.
Selling a cash-secured put has exactly two outcomes. The stock holds and you keep the premium, or the stock falls and you own the shares. So the first decision is not which strike to sell. It is whether you want the company at all.
If you would not be content owning it at that price, the
premium does not matter. That is the whole filter.
What the engine screens before it will sell anything
- A company worth owningLiquid, established, not one headline away from zero. Unusually rich premium is usually rich for a reason.
- Premium worth the collateralA cash-secured put ties up real money. The return has to justify the capital at risk, or you are better off simply buying the shares.
- Options that actually tradeWide spreads quietly eat the edge. If the contract cannot be closed or rolled cleanly, the strategy stops working the moment it needs to.
- A strike with roomFar enough out that ordinary movement does not assign you, close enough that the premium is worth collecting.
Why this is the step people skip
Screeners rank by premium, and the top of that list is almost always the riskiest names on the board. The discipline is in refusing them. A machine refuses them consistently; a person talks themselves into one on a slow week.
This is not theory.
The algo runs this every trading day and every fill is posted publicly — wins and losses, updated hourly, on a paper account.
See the live book Try it free for 30 daysThe wheel, lesson by lesson
01Name your price, get paid for itWhat a cash-secured put actually is — who pays you, why, and the two ways it ends.6:3102Getting paid to sellYou own the shares. Now the same trade runs the other way.6:4903How the cost comes downBasis: what the shares really cost after everything you have been paid.in production
04Putting it together — the wheelPuts into shares into calls and back again.in production
05Taking the shares earlyWhen waiting stops paying you anything, and what to do about it.in production
06When it goes against youThe covered strangle, and the order to try things in.in production
07Finishing the tradeCalled away is the good ending. The mistake is reaching for more.in production
08Put or call — the same tradeAt the same price they are the same bet. The difference is where the cash sits.in production
09How a machine runs itThe rules, unattended, against a public book.in production
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