Starting a new wheel campaign when implied volatility is scraping the floor is like working overtime at a job that suddenly cut your pay by 60%. You're putting up the same capital, taking on the same assignment risk, and collecting a fraction of what you'd earn in a better environment. Market conditions when you start matter enormously for your returns — here's what to look for.
What IV Rank Should You Look For Before Starting a Wheel Campaign?
IV Rank measures where current implied volatility sits relative to its own 52-week range. A reading of 25% means IV is at the 25th percentile of its range — on the low end. A reading of 75% means it's elevated. The wheel strategy sweet spot for starting new campaigns is IV Rank between 25-50% on your target ticker. Below 25% and the premiums aren't worth the capital commitment. Above 50%, something is usually wrong with the company or sector and assignment risk is meaningfully higher.
How Do You Use the VIX to Time Your Entry?
| VIX Level | Recommended Action | Reasoning |
|---|---|---|
| 12-16 | Start campaigns normally, standard sizing | Baseline premium environment, manageable risk |
| 17-25 | Increase campaign activity, stronger premiums | Elevated premium with acceptable overall risk |
| 25-35 | Be selective, reduce size, lower delta targets | High premiums but elevated gap-down risk |
| 35+ | Wait or sell very far OTM with minimal size | Extreme moves likely; assignment risk very high |
Why Does the Earnings Calendar Matter?
Selling a CSP that expires after an earnings announcement exposes you to a binary event that can move a stock 10-25% overnight. If you haven't done your fundamental homework, avoid expirations that span earnings. If you have researched the company using MoneySense.ai's 10-K and 10-Q analysis, you may have enough conviction to hold through — but it should be a conscious, informed decision, not an accident of timing.
What Are the Sector Rotation Signals to Watch?
Institutional money rotating out of a sector creates headwinds for every stock in that space, regardless of individual company quality. If financials are seeing consistent outflows or energy is under pressure from macro forces, the near-term risk of assignment on positions in those sectors is elevated. Starting new campaigns in sectors seeing inflows — or in defensives like consumer staples during uncertainty — often produces better risk-adjusted results.