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How much money do you need for the wheel strategy?

Each wheel position needs enough cash to buy 100 shares at the strike. That makes the stock's price the real minimum, and it's why small accounts end up with all their money in one name.

Options guide · 8-minute read · Updated 2026-10-26

The short answer

You need the strike price times 100 in cash for each position. A put with a $20 strike needs $2,000 set aside. A put with a $100 strike needs $10,000.

So there's no fixed minimum for the wheel strategy. The real question is how much you need to run it without putting your whole account into one stock. For most people, that's a few thousand dollars at the very least, and more if you want two or three names.

Why the strike sets the price of entry

The wheel starts with a cash-secured put. You sell a Put option and promise to buy 100 shares at the Strike price if the buyer exercises.

"Cash-secured" means the full cost of those 100 shares sits in your account, untouched, until the put is gone. If you're assigned, that cash buys the shares. Then you sell a Covered call on them. One contract always means 100 shares, so the math is always the same:

Cash needed = strike × 100.

The premium you collect does not reduce this. It's small next to the cash. Size every position by the cash, never by the premium. See position sizing for selling options.

The realistic minimum

Technically, a few hundred dollars can back a put on a very cheap stock. In practice, that's rarely a good place to start. Here's why the realistic floor sits higher.

• Cheap stocks are often cheap for a reason. Many shares under $10 belong to small or struggling companies. Their prices can swing hard.
• Cheap options have wide spreads. The gap between bid and ask can be a big slice of a small premium.
• Fees bite harder. A per-contract fee is the same on a $5 stock as on a $50 stock. On a tiny premium, it can take a large share.
• You want spare cash. If you're assigned and the stock drops, you'll want a cushion that isn't tied up.

A plain way to think about it: you need enough to back one put on a stock you'd honestly want to own, plus some cash left over. For many people, that lands somewhere around $5,000, which opens up decent companies trading under $40. Our page on the wheel strategy with $5,000 walks through that size.

The concentration problem, worked out

Small accounts have a catch that big ones don't. One position can be most of the account. Here's a worked example (an illustration, not a trade idea).

Two people sell the same put. A made-up stock, XYZ, trades at $22. Each sells one 30-day put at the $20 strike for $0.50, collecting $50. Each sets aside $2,000.

• Person A has a $2,500 account. The put ties up 80% of it.
• Person B has a $20,000 account. The put ties up 10% of it.

Now XYZ falls. Both are assigned at $20 and hold the shares.

Same trade. Same stock. Same loss in dollars. But for Person A, one bad stock is a crisis. For Person B, it's a bad month.

That's the concentration problem. It isn't a reason not to start. It's a reason to know exactly what one bad stock does to your account before you sell the first put.

How more money changes the picture

More cash doesn't change how the wheel works. It changes what you can spread across.

Whatever the size, the worst case for each position is roughly the full cash set aside, minus the premium. A stock that falls 30% after you're assigned costs 30% of that position, whether your account is small or large.

Account types and approvals. Selling cash-secured puts and covered calls needs options approval from your broker. Many brokers allow both at a basic level, but levels differ. See options approval levels explained.

In the US, many brokers allow covered calls in an IRA, and some allow cash-secured puts there too. In Canada, covered calls are widely allowed in a TFSA or RRSP, while cash-secured puts depend on the broker, and options permissions differ by broker.

What to do before you fund an account

1. Write down the stocks you'd truly want to own. Note each one's price.
2. Multiply each price by 100. That's the cash one put needs.
3. Decide the most you'd let one position be, as a share of your account. Many people pick a quarter or less.
4. If your list doesn't fit that cap, look for lower-priced names you'd still own, wait until you've saved more, or practice on paper first. See the cheapest way to start selling options.

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