Our Approach to the Wheel Strategy and How We Screen for Stocks

The Options Wheel is a popular income strategy for traders who want to generate consistent returns while potentially acquiring stocks at a discount. It combines two simple option-selling strategies: selling cash-secured puts and selling covered calls in a repeating cycle, or “wheel”. There’s no need to explain the strategy here because /u/ScottishTrader over at /r/OptionsWheel has written one of the best, most in-depth guides on The Options Wheel Strategy. It’s our base and we recommend reading it whether you’re new to the strategy or a seasoned options seller.

For details on our approach, continue reading…

We treat options trading the same way we approach any complex system: with structure, repeatability, and risk awareness. The goal isn’t to chase excitement or gamble on hype. Instead, we focus on building a consistent framework that compounds steadily over time.

Default Framework: 30–45 DTE, 0.20–0.30Δ

Our baseline trade is a cash-secured put with 30–45 days to expiration, generally in the 0.20–0.30 delta range. This strikes the balance between premium, risk, and flexibility.

That said, we adapt. When we know we’ll have more time during the week to monitor markets, we lean into weeklies. Shorter-dated contracts demand closer management, but the faster premium decay can be attractive when bandwidth allows. Why? Faster compounding opportunities and the ability to adjust more nimbly to market changes.

Stock Selection Philosophy

We’re not screening for whatever ticker is trending on social media. Our focus is on durability and liquidity. The names we target share a common profile:

Sustainable long-term trend – If assignment occurs, we’re comfortable holding for months.
Solid fundamentals – Companies with healthy balance sheets and reliable earnings streams.
High and consistent volume – Tight spreads and liquid chains are critical for scaling and clean exits.
Technical confirmation – Indicators like RSI, ADX, momentum measures, and EMAs serve as sanity checks.

Equally important is what we avoid: overhyped symbols with inflated IV and poor fundamentals. Premiums may look tempting, but the long-term math rarely works in your favor.

Risk & Regime Filters

The edge is often in restraint. We maintain a set of regime filters that keep us out of environments where short puts are at a structural disadvantage:

SPY below our EMA threshold → Reduce or pause new long-delta exposure.
VIX above our threshold → Scale down or step aside entirely.

These filters aren’t meant to predict the future—they’re simple, tested guardrails that reduce tail risk and preserve capital.

Position Management

Consistency comes from disciplined trade management, not constant tinkering. Our rules of thumb:

Place GTC buy-to-close orders at 30–50% of max profit.
Take early profits if 30–40% is captured quickly.
Always keep cash in reserve to manage positions.

If assignment happens, that’s by design. We only sell puts on names we’d hold comfortably, then transition to covered calls to continue the cycle.

Return Expectations

Executed consistently, this framework delivers mid-teens to ~75%% annualized returns, with the potential to reach higher depending on conditions and management intensity (i.e., more frequent weeklies will yield much higher returns versus 30-45 DTE’s). The emphasis is not on chasing the highest possible yield but on generating scalable, repeatable outcomes that can withstand different market regimes.

Closing Thoughts

Our philosophy is simple: select quality, filter for risk, manage with discipline, and let time do the heavy lifting. The “secret sauce” isn’t in a hidden formula—it’s in the way all of these elements are combined, optimized, and applied consistently.