The Option Wheel Strategy is a systematic approach to options trading where you intentionally cycle through three phases to generate consistent income:
- Sell Cash-Secured Puts (CSPs) on a stock you want to own, collecting premium until you get assigned.
- Take Assignment of 100 shares of the stock when the price falls below your strike price.
- Sell Covered Calls (CCs) against those 100 shares to collect more premium, until the stock is "called away" (sold) at a profit.
Once the shares are called away, the "wheel" resets and you begin selling cash-secured puts again. The strategy works because you are always collecting option premium — either while waiting to own the stock or while holding it.
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