This pre‑read sets up “The Wheel” options strategy as a practical, rules‑based way to generate cashflow while staying disciplined on risk. You’ll learn how to start with cash‑secured puts to get paid for setting buy‑levels you already like, then rotate into covered calls to monetize the shares you own, repeating the cycle only when pricing and risk conditions make sense.
A wooden wheel leans against a tree in grass.
We’ve included one short explainer and a broker‑grade overview to ground terminology, plus three approachable videos that build intuition for cash‑secured puts and covered calls before connecting the dots to the full Wheel. To anchor the philosophy, there’s an optional tie‑in to Taleb’s barbell idea: keep most capital safe, take small, repeatable risks with asymmetric upside, and avoid hidden leverage. This was also part of the pre-read for chapter 1a.
As you read and watch, focus on: entry criteria, strike selection, duration, assignment mechanics, and position sizing. The goal isn’t maximizing premium—it’s structuring consistent cashflow with defined risk, so you can practice the Wheel deliberately rather than chase volatility.
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Reading:
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Video:
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Optional Reading: Chapter on “Barbell Strategy” from “Antifragile” by Nassim Taleb (to better understand the philosophy)
- If you couldn’t get your hands on the book, check this blog post for a summary: Exploring The Barbell Strategy To Lower Risk and Increase Upside
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Practical play, head over to daystoexpiry for some fun with backtesting the wheel strategy on your favourite stocks.
