The Wheel Strategy: Turn Stock Options into Weekly Cash Flow

When most people think of stock market investing, they focus on buying low and selling high. But what if you could generate weekly income without constantly timing the market? Enter The Wheel Strategy, an options-based technique that creates consistent cash flow from stocks you already own—or plan to own.

What Is the Wheel Strategy?

The Wheel Strategy involves selling options in a systematic way:

1. Sell a Cash-Secured Put: You sell a put option on a stock you’re willing to buy at a specific price. If the stock doesn’t drop to that price, you keep the premium as profit. If it does, you buy the stock at your chosen price.
2. Sell a Covered Call: Once you own the stock, you sell a call option at a higher price. If the stock doesn’t hit that price, you keep the premium. If it does, you sell the stock for a profit.
3. Repeat: Once the stock is sold, go back to Step 1 and start the process again.
   
   

Why It Works

• Consistent Cash Flow: Selling options generates regular income, often weekly.
• Lower Risk: The strategy focuses on stocks you’re willing to own, avoiding speculation.
• Compounding Potential: Reinvest the premiums to accelerate portfolio growth.
  
  

Example: How Much Can You Earn?

Let’s say you sell a cash-secured put on Apple (AAPL) at a $170 strike price for a $2 premium per share. That’s $200 per contract upfront.

• If AAPL stays above $170, you keep the $200 as profit.
• If AAPL drops below $170, you buy the stock and move to Step 2, selling a covered call to earn more premiums.

Repeat this cycle, and you could see 30-40% annualized returns in certain market conditions.

Interesting Stats

• Options Market Growth: Over 11 billion options contracts were traded in 2023, a 14% year-over-year increase.
• Premium Income: Options sellers can collect 1-3% of a stock’s value monthly in premiums.
  
  

Why We Love The Wheel Strategy

At Unbroken Investing, we emphasize cash flow as the top priority. That’s why The Wheel Strategy is one of our favorites. Pairing this approach with dividend stocks creates two income streams:

1. Weekly premiums from selling options.
2. Quarterly dividends from holding stocks.

For example, a stock like AT&T (T) with a 7% dividend yield could also generate another 8% in annual option premiums. That’s a 15% yearly return from one investment!

Final Thoughts

The Wheel Strategy is perfect for investors seeking predictable, passive income with manageable risk. By sticking to quality stocks and staying disciplined, you can turn your portfolio into a weekly income machine.

At Unbroken Investing, we specialize in innovative strategies like The Wheel. Ready to make your investments work for you? Let’s get started!