What is a Wheel Strategy & how does it work?

By “wheeling a stock,” or using the wheel strategy with a specific stock, you are placing a bet on the future of the company. While selling options and calls allows you to collect premium, you do not have to own stock.

What is the symbol for trading the Wheel Strategy?

So we will choose SPY is the symbol for trading the Wheel Strategy. The Wheel Strategy is a sequences of repeatable steps that we can use to combine selling options with holding stocks to buy low and sell high the SPY ETF. The 3 steps of the SPY options strategy depend on the number of shares you hold:

Can you run a Wheel Strategy on penny stocks?

In order to successfully execute the wheel strategy, you have to be able to trade stocks that are liquid and have an active options market. While some prefer the lower risk of penny stocks, you will likely not be able to run the wheel strategy on penny stocks because they may not have active options.

Is the Wheel Strategy a low-risk method of trading?

All traders want to earn the highest returns possible on their investments, and many of them consider the wheel strategy as a low-risk method of trading. By “wheeling a stock,” or using the wheel strategy with a specific stock, you are placing a bet on the future of the company.