Wheeling — Income from Cash-Secured Puts & Covered Calls

Who this is for: Traders generating income by selling cash-secured puts (CSPs) and covered calls on quality names they'd be happy to own. Slower, more forgiving, and more mechanical than directional options — the edge is name selection and disciplined rolling, not timing.

The wheel cycle

1. Sell a cash-secured put on a quality stock, at a strike you'd happily buy it at. Collect the premium and set aside the cash to buy 100 shares if assigned.
2. If it expires worthless → keep the premium and sell another put. Repeat.
3. If you're assigned → you now own 100 shares at your strike, with your cost basis lowered by the premium you collected.
4. Sell a covered call against those shares, above your cost basis, and collect more premium.
5. If called away → you sell the shares at a profit and start the wheel over with a new CSP. If not → keep the premium and sell another call.

The workflow in TD Pro

1. Vet the underlying first. The wheel only works on names you genuinely want to own. Open the stock's Long Term Value page and check its quality score and the options suitability checklist (earnings risk, strike safety, DTE). Never sell a put on a name you wouldn't hold through assignment.
2. Find the put. Run the CSP Wheel screener for high-IV, liquid candidates. Higher IV means richer premium — but only on a name you vetted in step 1.
3. Check liquidity. Open the Liquidity Map to read the bid-ask spread per strike, so you don't get stuck in a wide, illiquid contract.
4. Sell and track. Log the position in the Wheel Tracker — it tracks open CSPs and covered calls, roll/assign/called-away actions, cost basis, cycle income, and your win/loss stats. If you're assigned, it walks you into the covered-call leg.
5. Roll or take assignment, mechanically. Near expiration, roll for more premium or accept assignment. The tracker shows cost basis and cycle income so the decision is data, not emotion.

Before you sell — the checklist

• Underlying passes the Long Term Value quality + suitability check
• You'd genuinely be happy owning 100 shares at the put strike
• Premium worth it (decent IV) on a liquid contract with a tight spread
• Cash set aside to cover assignment — it's cash-secured for a reason
• No earnings before expiration, unless you want that risk

Advanced: the poor man's covered call

Instead of buying 100 shares, buy a deep-in-the-money LEAPS call (via the LEAPS scanner) as your stock substitute, and sell shorter-dated calls against it — less capital, similar income mechanics. It's more complex; learn the basic wheel first.

Common mistakes

• Selling puts on a name you don't actually want to own (chasing IV alone).
• Ignoring earnings — a CSP across an earnings report can gap through your strike.
• Selling covered calls below your cost basis and locking in a loss if called.
• Selling illiquid contracts and getting trapped by the spread.