Question 1

Which OptionScout tier should I pick?

Accepted Answer

For Wheel newcomers, start with Free to explore the screener and learn the workflow. Choose Pro (monthly) if you are an active monthly screener and need unlimited scans, the simulator, real-time alerts, and trader chat. Choose Annual (yearly) if you are a long-term strategy backtester and need export-ready CSV + JSON analytics; Annual also saves roughly 17% versus month-to-month Pro and includes team seats.

Question 2

What is the Wheel Strategy?

Accepted Answer

A repeatable options-income cycle: sell a cash-secured put, accept the assignment or keep the premium, sell a covered call against the resulting shares, then let the call get called away or roll it forward. Each leg pays premium on a name you would willingly own at the strike.

Question 3

How does a cash-secured put work?

Accepted Answer

You sell a put option and park enough cash to buy 100 shares at the strike if it gets assigned. You keep the premium whether or not the put ever gets exercised; if it does, the cash buys the shares at a price you picked — usually below where the stock trades today.

Question 4

What happens if the put gets assigned?

Accepted Answer

Your broker uses the cash you set aside to buy 100 shares per contract at the strike. You now own the stock at a cost basis equal to the strike minus the premium you already collected, and the Wheel moves to leg two — selling a covered call against those shares.

Question 5

How much capital do I need for each leg?

Accepted Answer

Cash-secured put: enough cash to buy 100 shares at the strike (strike × 100, minus the premium which is yours either way). Covered call: 100 shares per contract — buying them outright, or holding them after CSP assignment. Nothing in the Wheel itself requires a margin account; margin is an option, not a requirement.

Question 6

What is the risk profile of the Wheel?

Accepted Answer

Defined risk on the cash-secured put — the worst case is owning shares at a strike you chose and below the spot. Defined risk on the covered call when shares are already assigned — capped upside above the strike, full downside of owning the stock below it. The strategy never eliminates the underlying stock risk; it controls when you take it and at what price.

Question 7

How does IV Rank affect the premium I collect?

Accepted Answer

IV Rank (implied volatility rank) measures where current implied volatility sits relative to the past 52 weeks, on a 0–100 scale. A higher IV Rank means options are pricier across the chain — the same strike and expiration pays more premium when IV Rank is 60 than when it is 20. The Wheel is best run when IV Rank is elevated relative to the ticker’s own history; chasing premium in low-IV names usually means chasing thin premiums.

Question 8

When should I adjust an open Wheel trade?

Accepted Answer

Roll or close before you cross 21 days to expiration, when delta has crept and gamma is starting to dominate theta. The full playbook — roll for credit, close at a loss, accept assignment, rescue with a different strike — is in /learn/adjustment-playbook.

Question 9

Should I use weekly or monthly expirations?

Accepted Answer

Pick by capital turnover vs yield per contract. Weeklies (7 DTE, where DTE is days to expiration) free up cash every Friday and pay smaller individual premiums with less room to roll. Monthlies (30–45 DTE) tie cash up longer but pay more premium per contract and leave calendar to adjust if the trade goes off-script.

Question 10

Which brokers support the Wheel?

Accepted Answer

Any broker that lets you sell cash-secured puts and covered calls in a cash account works — most retail brokers (Schwab, Fidelity, IBKR, Robinhood, Webull, TD Ameritrade successors) qualify. You typically need options approval Level 2 or 3. The Wheel itself does not require a margin account, although some brokers will only let you sell naked puts in a margin account even when they are cash-secured.

Question 11

Is the simulator the same as trading with real money?

Accepted Answer

The /simulator page lets you walk a full Wheel cycle with simulated money — no broker connection, no live execution, no signup required. The math is the same and the decision rules carry over, but slippage, partial fills, early assignment, and dividend events are smoothed out so the cycle runs end-to-end. Use the simulator to rehearse a name before you put real capital on it.

Question 12

How much money do I need to start running the Wheel?

Accepted Answer

One contract at a time is enough. One CSP ties up strike × 100 in cash (so $20,000 to sell a $200 put); one covered call ties up the cost of 100 shares. Starting with a single name and one contract at a time — scaling up only after a few full cycles completed cleanly — is the usual path.

Question 13

What are the tax implications of running the Wheel?

Accepted Answer

Premium collected on short options that expire worthless is generally short-term capital gain. Premium on assigned or exercised options adjusts the cost basis of the resulting stock. None of this is tax advice — the rules vary by jurisdiction, holding period, and broker reporting; consult a tax professional who knows your full picture before you treat premium as income.

Question 14

Can my short put be assigned early before expiration?

Accepted Answer

Early assignment on a short cash-secured put is rare but possible — most often on the day an ex-dividend date passes or when the put goes deeply in the money in the final days before expiration. The way to manage it is to avoid selling puts through an ex-dividend date the seller would rather avoid (a 1-week DTE put expiring the Friday before a dividend payout), and to size the CSP so the worst case is a stock you would actually own at the strike. Treat the risk as real but small: most short puts run to expiration without ever being assigned.

Question 15

How much cash do I need to set aside to run the Wheel?

Accepted Answer

For each short put you sell, you must have strike × 100 in buying power reserved in cash — a $50 strike ties up $5,000 per contract. That cash is the “secure” in cash-secured, and it sits idle until either the put expires worthless (and the full reserve frees up) or the put gets assigned (and the reserve converts into 100 long shares per contract). There is no Wheel requirement for a margin account; selling a naked put in a margin account can yield a similar premium, but margin interest and the loss profile are not the same trade, and the cash-secured version is what the Wheel refers to in the curriculum.

Question 16

What should I do if the underlying drops after I am assigned?

Accepted Answer

Assignment on the put is the entry into the covered-call leg, not a signal. The shares you now own cost you strike minus premium, so the “real” cost basis is lower than the strike by however much premium you collected on the put. From there the playbook is the same one Module 04 walks through: sell a covered call above your cost basis (not above the strike) at a DTE and delta that fits the name, and only roll, close, or accept a loss on the call when the trade goes off-script. Do not average down by selling more puts at a lower strike just because the stock dropped — a CSP loss-cap is the strike, not the spot.

Question 17

How does assignment change my taxes and cost basis?

Accepted Answer

When a short put gets assigned, the premium you collected on the put is subtracted from the strike to set the cost basis of the resulting 100 shares. When a covered call gets assigned against those shares, the call premium is added on top of the sale price. In other words, the premiums do not disappear at assignment — they roll into the basis or are added to the sale proceeds. Holding period (long vs short term) still starts on the day of acquisition and resets on every new lot, so very short holds can push what looks like long-term income into short-term tax treatment. None of this is tax advice — the rules vary by jurisdiction and broker reporting; confirm with a tax professional who knows your full picture.

Question 18

How do I exit the cycle cleanly — roll, close, or let it be called?

Accepted Answer

There are two clean exits from the covered-call leg. (1) Let the call get assigned: the shares leave at the strike, you collect the call premium, and the Wheel resets — open a new CSP on a name you actually want to own. (2) Buy the call back to close and exit early: this is the right move when the trade has gone off-script or you no longer like the setup, even at a small debit. The messy third path — rolling the call up and out for a credit — works to delay a call-out you cannot accept, but each roll is a new trade with its own theta, and the cycle exits cleanly only when the call is either called away or bought back. Do not stay in a Wheel position just to collect the next premium if the underlying reasons for entering have changed.

Common questions about the Wheel