What this site is
OptionsWheeler is an educational website. I explain how the Options Wheel works and share how I approach it myself. Nothing here is personal advice, a recommendation to buy or sell any security or options contract, or a trade signal. I don't know your circumstances, so I can't tell you what is suitable for you.
Where I describe what I do, that is simply what I do. It may not suit you, and the way I run the Wheel may change over time.
Risks of the Options Wheel
- You can lose money, including a lot of it. A cash-secured put can leave you owning shares that have fallen sharply. The premium you collected is small compared with a large fall in the share price.
- Assignment isn't always avoidable. You may be required to buy shares at the strike price, whatever the market price is at the time.
- Covered calls limit your upside. If the shares rise well above the strike, you give up the gains above it, and the shares may be called away.
- Rolling doesn't remove losses. It changes the timing and terms of a position. It can keep your capital tied up in a falling stock for longer.
- Premium isn't guaranteed income. It is payment for taking on risk.
- Your capital is tied up. Cash set aside to secure puts can't be used elsewhere, and shares you hold can fall in value.
- Real trading has costs. Commissions, fees, bid-offer spreads and tax all reduce results. Tax treatment depends on your circumstances and can change.
About the examples and tools
Examples and calculator results are illustrations with round numbers. They exclude fees and tax, and they don't predict or promise any outcome. Past results, including mine, don't indicate future results.
Before you trade
Do your own research, only risk money you can afford to lose, and consider speaking to a suitably qualified and regulated financial adviser. Check that your broker offers options to you and that you understand what you're signing up to.
Read the beginner's guide