The Wheel Strategy Overview

The Wheel Strategy is a systematic, repeatable approach to generating income from options. Thisoptions wheel strategy guide explains how to run the wheel strategyfor passive income. It's perfect for small to large accounts, requires no complex data analysis, and is fully automatable through broker APIs like Interactive Brokers (IBKR). Learn toautomate wheel strategy execution for consistent income. This guide covers both variations: the Traditional Wheel and the Long-Term Investment Wheel.

What Is the Wheel Strategy?

The Wheel is a cyclical income strategy that combines cash-secured puts (CSPs) and covered calls (CCs) to generate consistent premium income. It's called "The Wheel" because it creates a continuous cycle of income generation.

Why the Wheel Works for Passive Income

  • Generates passive income options wheel income whether you own shares or not
  • Works with any account size—perfect for wheel strategy for small accounts ($500+)
  • Uses only basic options concepts (puts and calls)
  • Can be fully automated through wheel strategy automation via broker APIs
  • Low maintenance once set up correctly

The Wheel Cycle

  1. Step 1: Sell Cash-Secured Puts

    Choose a stock you'd be happy to own. This is the cash secured put wheel entry point. Sell a put option and collect premium.

    Learn more about Cash-Secured Puts →
  2. Step 2: If Assigned → Own Shares

    If the stock price falls below your put strike, you're assigned 100 shares at a discount.

    Learn more about Assignment →
  3. Step 3: Sell Covered Calls

    With 100 shares, sell a covered call—this is the covered call wheel strategycomponent. Collect premium and continue the cycle.

    Learn more about Covered Calls →
  4. Step 4: The Cycle Continues

    If called away, repeat from Step 1. If not, continue selling calls from Step 3.

    Learn more about The Cycle →

Two Variations of the Wheel

Traditional Wheel

Sell CSPs → If assigned, sell covered calls → If called away, repeat. Perfect for small to medium accounts. Simple, effective, fully automatable.

  • Best for: $500 - $25,000 accounts
  • No complex data needed
  • Fully automatable via IBKR API

Long-Term Investment Wheel

The long term wheel strategy involves selling covered calls on long-term holdings, then rolling or buying back to prevent assignment. Keep your shares forever. Perfect for tax-conscious investors seeking passive income.

  • Best for: $10,000+ accounts
  • Preserves long-term holdings
  • Tax-efficient strategy for passive income
Learn more about Long-Term Wheel →

Getting Started

Follow the steps in order to understand each component of the Wheel Strategy:

Step 1: Cash-Secured Puts →Step 2: Assignment →Step 3: Covered Calls →Step 4: The Cycle →

Find Your Capital Range

Once you understand the Wheel Strategy, check your capital range to see specific guidance on stock selection, market caps, and income expectations for your account size.

View Capital Ranges →