The Wheel Options Strategy for Beginners

This article serves to inform a beginner on how to run the options wheel strategy successfully with minimizing risk and maximizing profits.

It is important for you to read the whole article, as all of this information pertains to how the wheel strategy works. Enough talking now:

For those who are delving into the world of options, you may have heard about a strategy called the Options Wheel. The wheel is a great strategy for generating semi-passive income with a lower risk than many other strategies. What really shines in the options wheel is the consistency and scalability which can both benefit small and large accounts alike.

Account Size

When trading options, always remember that the market will always be a game of chance. No matter how much time you put into research, the market will always remain unpredictable, and therefore it is important to only start with what you are willing to lose. Make a wise financial decision, and do not put all of your investing money into the wheel.

• A good balance of investing would be 60% in index funds, and the remaining 40% or less into the wheel strategy.

That being said, the amount of money required to start the wheel strategy is at least $2500

Having $2500 in your account ensures that you will be able to trade contracts on stocks or etfs which are above $20, which have significantly better risk-to-reward compared to penny stocks.

Now that we have finished with the formalities, lets get into turning the wheel.

Step 1: Pick a Stock

The stock you pick for your wheel is extremely correlated to the performance of your account.

Only pick a stock that your are bullish on, or think will rise in the long term

Only pick a stock that you can afford. Your account value must be 100x greater than the price of the stock.

For example, some stocks that I like to use for the wheels strategy are:

• TNA (an ETF)
• AMD
• INTC
• SPY (another ETF)