My Personal Rules for Running the Wheel

Introduction

Every trader eventually develops their own set of rules. Mine are not rigid laws but guiding principles that keep me disciplined. I sometimes break them opportunistically, but they form the backbone of how I run the wheel.

Stock Selection

I normally pick stocks I want to own long-term. This way, assignment is not a problem but an opportunity.

• Avoid penny stocks or those under $10.
• Stick to liquid (high volume), fundamentally strong names.

Trade Timing

• Sell CSPs when the stock is red - premiums are richer.
• Sell CCs when the stock is green - again, richer premiums.
• Roll up/out only when there’s a sizeable move and I can roll for a credit.

Profit-Taking

• Target 60%+ profit capture.
• If expiration is near and the strike is far away, I let it expire.
• This avoids unnecessary commissions and keeps things simple.

Risk Management

• Avoid trades expiring near earnings.
• Watch ex-dividend dates for calls.
• Spread risk across trades - no single position dominates.
• No margin trading - staying cash-secured keeps risk contained.

Expiration Choices

• Prefer monthly expirations (3rd Friday).
• DTE between 25–50 days.
• Delta between 0.2–0.3, lower for CCs when I’d prefer not to be assigned.

Flexibility

Rules guide me, but I stay opportunistic when setups look compelling. Sometimes breaking a rule is the right move, but I do it consciously.

Conclusion

These rules keep me consistent and disciplined. They’re not perfect, but they help me avoid emotional trading and focus on long-term success.

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This article is educational and not investment advice. Options involve risk; read our Terms and consult a professional as needed.