A Checklist for Starting
Your First Wheel Trade

Before you even open your brokerage app, start with your mental checklist. Successful Wheel traders approach the market as business operators, not gamblers. Here's what that means:

You're selling insurance, not buying lottery tickets.

Every option you sell transfers risk from someone else to you — and they're paying you for that.

You're managing a business, not chasing trades.

Every position is a calculated decision based on capital, probabilities, and discipline.

You're optimizing consistency, not maximizing excitement.

The Wheel Strategy works because it compounds small, steady wins — not because of occasional home runs.

Write this mindset down somewhere visible:

The Wheel requires cash-secured puts and covered calls, both of which involve holding or potentially buying 100 shares of stock per contract.

Capital Requirements

To run one full Wheel cycle, you need:

• •Enough cash to buy 100 shares of your chosen stock (strike price × 100).
• •A buffer of 5–10% to handle fluctuations or adjustments.

Example:

If your capital is smaller, choose lower-priced tickers or ETFs like:

SOFI, F, PLTR, or SCHD (low-to-moderate cost stocks)

Or start on paper trading platforms (Tastytrade, ThinkorSwim, Interactive Brokers demo) to practice risk-free.

This is the foundation of your Wheel. Remember, the Wheel often leads to owning the stock — so pick something you'd be comfortable holding long-term.

Checklist for Stock Selection

Examples:

• •Tech: AMD, AAPL, MSFT
• •ETFs: SPY, QQQ, VTI
• •Dividend-focused: SCHD, MO, KO

Write down your chosen ticker and your reasoning — this reinforces intentionality.

Before you hit "Sell," confirm your trade setup using the metrics from Chapter 5.

Metrics Checklist

Example:

Suppose AMD is trading at $110. You're looking at the $105 strike put expiring in 30 days:

✓ Meets all criteria — it's a strong candidate for your first Wheel trade.

This is where the Wheel begins. You're selling a promise: "I'll buy 100 shares of this stock at $X if it falls to that level."

• •If the stock stays above your strike price at expiration, the put expires worthless, and you keep the premium.
• •If it falls below, you're assigned 100 shares at that strike — and you now own stock at an effective discount.

Execution Steps

Example:

A professional treats every trade like a business transaction. Keep a Wheel Journal — a spreadsheet or notebook where you log every position.

Trade Journal Example

Add notes about your reasoning:

This habit turns you from a reactive trader into a reflective one — and it's invaluable for long-term success.

Once your put is live, your work shifts from action to observation. You don't need to stare at the screen all day — but you do need a plan.

Your Management Checklist

If the stock closes above your strike at expiration:

• •The option expires worthless.
• •You keep the premium.
• •Restart the cycle by selling another put.

If the stock closes below your strike:

• •You get assigned 100 shares.
• •Your cost basis = strike – premium.
• •Move to the next step: selling covered calls.

Congratulations — you now own 100 shares! Time to start the second half of the Wheel.

You'll sell a covered call on your new position, which gives another trader the right to buy your shares at a set price. You earn additional premium income while waiting for the shares to rise.

Execution Checklist

If the stock is called away at expiration, you sell at a profit and restart the Wheel. If it's not called away, sell another call next month — and continue collecting income.

After your first full cycle, reflect. The Wheel isn't just about collecting premiums — it's about refining your process.

Ask yourself:

• •Did I follow all steps in my checklist?
• •Was my capital allocation appropriate?
• •How did I handle emotions during fluctuations?
• •Did my metrics (IVR, Delta, etc.) align with the outcome?

Every reflection is data. Over time, you'll build intuition backed by experience.

Once you've completed your first successful Wheel cycle, it's tempting to jump into multiple trades. But scale requires structure.

Position Sizing Rules

• •Never risk more than 5–10% of total portfolio on one ticker.
• •Diversify across sectors — tech, finance, consumer goods, etc.
• •Keep a small cash buffer (10–20%) for adjustments or new trades.

Example:

If your portfolio is $30,000:

As you gain experience, you'll want to evaluate the efficiency of your Wheel. The simplest way is to calculate your Return on Capital (ROC) per cycle and annualize it.

Example:

Your actual returns will be lower once you include rollovers, idle time, and assignments — but even 15–25% annualized is excellent for a low-drama strategy.

The market evolves, and so should you. Keep studying:

• •Follow educational platforms like Tastytrade or Option Alpha.
• •Revisit your old trades quarterly and analyze what worked.
• •Track your average premium per trade, win rate, and capital efficiency.

Knowledge compounds — and so does discipline.

When you complete your first Wheel trade, you've officially shifted from learning to earning. You're no longer just reading about options — you're managing a small, cash-generating business.

Every Wheel trade will strengthen your intuition:

• •You'll recognize when premiums are attractive.
• •You'll understand how volatility feels in real time.
• •You'll develop calm — the rarest quality in trading.

Start small, stay systematic, and respect your checklist. If you do, each spin of the Wheel will bring you closer to mastery — not through luck, but through disciplined repetition.