How to use the Wheel Strategy on Robinhood

Using the Wheel Strategy to Generate Monthly Passive Income

Photo by Austin Distel on Unsplash

With Options Trading becoming a wildly popular feature on Robinhood, many traders are flocking to the “tried-and-tested” strategies like the Wheel Strategy.

The Wheel Strategy consists of Selling Put’s and Call’s in a repetitive cycle which is coined the “Wheel.” Traders will switch from Puts to owning 100 shares of a stock, until those shares are called away.

If you want to learn everything that a beginner would need to know about the Wheel Strategy, then you should read my most popular article, “How to use the Options Wheel Strategy.”

This article will not focus on the tiny details of the Wheel Strategy, but will document how a Robinhood User can use the Wheel Strategy to Generate Passive Income

Step 1: Choose a Stock

This step is referenced in much more detail in my article, but in essence, choose a stock that you are very bullish, and make sure that your buying power is larger than the price of 100 shares of it.

Got a stock in mind? Perfect, time for the next step.

Step 2: Unlock Options Trading

Getting started with trading options on Robinhood will likely take less than 5 minutes.

All you need to do is fill out a quick form on your knowledge, and press Submit.

Your Robinhood options level will have to be 2 or higher to use the Wheel Strategy. This is because level 2 grants you the right to:

- Sell a Covered Call

- Sell a Cash Secured Put

Step 3: Sell the CSP on your Stock

Go over to your stock, and select the View All Options Tab.

Now that you are at the options ladder, navigate to the expiration dates that are approximately 1 month away.

Choose to Sell a Put, and select the Option Contract that has a: