Ryan Tanaka

The Wheel, an income loop

The wheel is two trades you already know- a cash-secured put and a covered call- run in a loop on a stock you would be genuinely fine owning. Sell a put to get paid while you wait to buy; if assigned, own the shares and sell calls against them until they get called away; then start over. Drift the sliders on TSLA at $420 to see the income per cycle and a rough yield.

The loop, two steps

Cash-secured put

Get paid to wait to buy

Sell a put at strike 400 on a stock you want to own. You collect $- per share up front and set aside cash to buy 100 shares at the strike.

Stays above 400? Keep the premium and repeat. Drops below? You are assigned: buy 100 shares at 400.

Covered call

Get paid to hold

Now you own 100 shares. Sell a call at strike 440 against them and collect $- per share.

Called away? You sell at 440 for a gain plus premiums. Not called? Keep the premium and repeat.

Put premium→assigned, own shares→call premium↻called away, back to start

Income per cycle

one leg (a put OR a call) per cycle, per 100 shares, over 30 days

Rough yield

annualized-ish rough guide, not a promise

Per share	Sell put	Sell call
Strike	-	-
Premium collected	-	-
Cash set aside / basis	-	-

Put strike (price you would buy at)$400

Call strike (price you would sell at)$440

Days per cycle30

Implied volatility45%

The two premiums are priced with the same Black-Scholes math used elsewhere on this site. The yield below assumes you can repeat a similar cycle- real markets will not cooperate every 30 days, so treat it as a ceiling, not a plan.

Plain EnglishThe wheel is nothing new- it is a cash-secured put and a covered call run in a loop on a stock you are genuinely fine owning. It earns steady income in calm, sideways markets, but it caps your upside if the stock rips higher and it carries real assignment risk if the stock falls. Only run it on stocks you actually want to hold at the put strike- if you would not want the shares, do not sell the put.

Three things to know about the wheel:

Nothing new, just looped. It is a cash-secured put, then a covered call, repeated. If you know both trades, you already know the wheel.
Income now, capped upside later. You get paid premium in calm markets, but a covered call caps your gain and a sold put means you can be forced to buy while the stock is falling.
Only wheel what you want to own. Assignment means you buy 100 shares at the put strike. Run it only on a stock you would be happy holding at that price.

Taxes are not shown here. Options and the underlying stock are taxed differently, and it depends on your holding period and account type. None of this is tax advice.