Imagine earning $200 per week for just 10 minutes of work. That's exactly what the continuous wheel strategy enables when you understand how to play both sides of the market simultaneously.
In this real trading example on Marvell Technology (MRVL), we collected approximately $200 in option premium by selling both a cash-secured put and a covered call on the same underlying stock. This bilateral approach has a built-in advantage: at least one side is guaranteed to win since the stock price can only move in one direction at a time.
Better yet, if the stock price declines and we get assigned on the put, we're actually lowering our overall cost basis through dollar cost averaging—acquiring more shares of a stock we want to own anyway at progressively better prices.
Key Concept: The continuous wheel strategy involves selling cash-secured puts when you don't own the stock, and covered calls when you do. By running both simultaneously on a position you already own, you collect premium from both call and put sides while the stock price determines which contract profits.
When the market opened on this particular day, Marvell Technology's stock price moved downward. We had already placed orders for both a cash-secured put and a covered call, but only the put executed immediately at market open.
Here's what happened with the cash-secured put:
Notice that we received $0.42 more per share than we initially bid. This happens when there's strong demand for the put options at market open. Instead of the expected $100, we collected $142—a welcome bonus of $42 on this single contract.
Our covered call order didn't fill immediately. We had placed the order at $0.57 per share ($57 per contract) for two contracts. After watching for about 30-45 minutes without execution, we had to adjust our strategy.
Here's what we did:
While we had to reduce our asking price significantly, we still collected $54 in premium on the covered call side. When you add the extra $42 we gained on the cash-secured put, the overall trade still netted approximately $200 for the week.
Total Weekly Premium Collected: $142 (cash-secured put) + $54 (covered calls) = $196, rounded to approximately $200 for simplified tracking.
After executing these trades, proper tracking becomes essential. This is where many option sellers struggle with spreadsheets—manually entering data, calculating fees, tracking cost basis adjustments, and ensuring nothing falls through the cracks.
In the MyATMM platform at myatmm.com, we navigate directly to the cost basis screen for our MRVL position. The dashboard already shows we've collected $1,013 in total premium on this position since we started trading it in January—about a month and a half of trading activity.
The platform also displays our current unrealized loss of $580 on the stock position itself. This is important context: while the stock price may be down, our premium collection is working to offset these paper losses.
We need to record two "Sell to Open" transactions:
Covered Call Entry:
Cash-Secured Put Entry:
After entering both positions, we can see that the stock price has already moved significantly. At the time of recording, MRVL dropped about $1.50-$2.00 for the day, putting it around $42.60. This means our cash-secured put at the $44 strike is already in the money.
Strike Price: $44.00
Premium Collected: $1.42
Break-Even Price: $44.00 - $1.42 = $42.58
With the stock trading at $42.60, we're essentially at break-even when you factor in the premium collected. Even if we get assigned, we haven't really lost money—we've just acquired shares at an effective price of $42.58.
The MyATMM platform uses a "proposed records" system that makes data entry easier. When you save each position, it moves to a staging area. From there, you can use helper buttons to automatically populate the transaction history rather than typing everything manually.
This is especially valuable for tracking fees and commissions. While this demonstration uses a Think or Swim paper trading account (no fees), real accounts have transaction costs that need to be tracked for accurate cost basis calculations.
After clicking save on both the covered call and cash-secured put transactions, the platform shows:
The most powerful aspect of the continuous wheel strategy is how premium collection systematically reduces your cost basis over time. In this MRVL example, we can see the progression clearly.
If we do get assigned on the cash-secured put this Friday, our dollar cost average will be exactly $45.00 per share. However, when we factor in all the premium collected through covered calls and cash-secured puts, our true cost basis is only $39.46 per share.
That's a significant difference:
We're continuing to push our cost basis down even further with each weekly cycle. Given enough time and consistent premium collection, this cost basis will eventually reach zero and then go negative.
Once your cost basis goes negative, you're essentially owning the stock for free—and every dollar of premium you collect after that point is pure profit, or "gravy" as traders like to say. The stock itself could go to zero and you'd still be profitable from all the premium collected along the way.
Timeline Context: In just over a month and a half of trading MRVL using this strategy, we've collected $1,209 in total premium. That's approximately $200+ per week in a relatively conservative approach with manageable position sizes.
One challenge that many traders face with the continuous wheel strategy is capital management. In this Think or Swim demo account, we have plenty of collateral to work with. But in a real trading account, you might reach a point where you don't have another $4,400 (100 shares × $44 strike) available to run another cash-secured put.
When you've reached the limit of your available cash for collateral but still want to collect premium on the put side, you can employ a rolling strategy. This allows you to continue using the same collateral to collect additional premium without requiring assignment.
Here's the strategy for prolonging your collateral usage:
Our cash-secured put has a $44 strike price, but the stock is trading at $42.60—already in the money. If we don't have additional capital to handle assignment, we could roll this position on Thursday:
Diminishing Returns: You won't collect $142 every time you roll. As the position gets deeper in the money or as you push the strike price lower, the premium you collect will decrease unless the stock price recovers.
Early Assignment Risk: The closer you get to expiration, the higher the risk of early assignment, especially if the put is significantly in the money. That's why Thursday is recommended rather than waiting until Friday.
Consider Rolling Earlier: If the position is deep in the money with a week or more until expiration, you might want to roll even earlier to reduce early assignment risk.
Strategic Advantage: Despite diminishing returns on each roll, this technique allows you to continue collecting premium and extending your capital efficiency. You're generating income from the same collateral repeatedly rather than having it sit idle or tied up in assigned shares.
The beauty of running both covered calls and cash-secured puts simultaneously is the mathematical certainty: at least one side must profit.
The stock price can only move in one direction at expiration:
If the stock price rises:
If the stock price falls:
If the stock stays relatively flat:
Risk Management Note: The real risk isn't losing on one side—it's a dramatic price move that causes a large unrealized loss in the stock position. However, the continuous premium collection works to offset these losses over time. Choose quality underlying stocks you're comfortable owning long-term.
Running a continuous wheel strategy with bilateral positions creates a lot of data to track:
Attempting this in a spreadsheet quickly becomes overwhelming. One missed transaction or formula error can throw off your entire cost basis calculation.
The MyATMM platform is purpose-built for option sellers running exactly these types of strategies:
In the MRVL example, we can instantly see that we've collected $1,209 in total premium over about six weeks of trading. We can see our current cost basis ($39.46), what it would be if assigned ($45.00), and our overall position performance—all without touching a single spreadsheet formula.
Options trading involves substantial risk and is not suitable for all investors. The continuous wheel strategy described in this article involves selling cash-secured puts and covered calls, which can result in assignment and significant capital requirements. Stock prices may decline significantly, resulting in unrealized losses on assigned shares that exceed the premium collected.
This content is for educational purposes only and should not be considered personalized investment advice. Before engaging in options trading, carefully consider your financial situation, investment objectives, and risk tolerance. Early assignment can occur at any time, especially with in-the-money options. Consult with a qualified financial advisor regarding your specific circumstances.
Past performance does not guarantee future results. Market conditions, volatility levels, and individual stock movements will cause actual results to vary significantly from any single example. Always understand the complete risk profile of any options strategy before committing capital.
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