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Your first wheel trade: a one-page checklist

Before your first wheel trade, answer seven questions in order: the stock, the cash, the strike, the date, the size, the earnings date and the exit. If any answer is "not sure," don't place the trade yet.

Options guide · 6-minute read · Updated 2026-10-26

The checklist in one line

Your first trade in the wheel strategy is a cash-secured put: you sell a Put option and keep the cash to buy 100 shares. Work through the seven checks below, in order. Any "no" stops the trade.

New to puts? Read the cash-secured put guide first.

The seven checks

1. The stock. Would I be glad to own 100 shares of this company for months, even if it fell? Do I understand how it makes money?
2. The cash. Do I have strike × 100 in cash, without touching money I need for bills? Is that a size that fits my account?
3. The strike. Is the Strike price a price I'd truly pay? Is it below the stock today, ideally near the last place price turned around?
4. The date. Is the Expiration date about 30 to 45 days out? That is a common habit, not a rule.
5. The size. Is it one contract? Your first trade should be the smallest one possible.
6. The earnings date. Does the next earnings report land after expiry? Check the company's investor page, not just the broker.
7. The exit. Have I written down when I'd buy the put back, and where I'd sell the shares if I'm assigned and the stock keeps falling?

Two more quick checks on the chain itself. Is the gap between bid and ask small, a few cents? Is there real Open interest, meaning other traders hold that strike? Wide gaps and empty strikes make fills worse.

The checklist on one trade (an illustration, not a trade idea)

A made-up stock, XYZ, trades at $40. You'd own it. It turned around near $37 last month.

• Stock: yes, you'd hold it.
• Cash: $3,700 for a $37 strike. That's under a fifth of your $20,000 account.
• Strike: $37, the price you'd pay.
• Date: 35 days out.
• Size: one contract.
• Earnings: three weeks after expiry.
• Exit: buy back at half the premium; if assigned, sell the shares if XYZ closes under $32.

You sell the $37 put for $0.70 and collect $70.

The checklist doesn't stop losses. It makes sure that the $430 row is one you chose and can live with, before you ever see it.

After assignment: the call checklist

If you get the shares, the second leg needs four more checks:

• Strike at or above your cost. Here your cost is $36.30 ($37 minus the $0.70). A call below that can sell your shares at a loss.
• Ex-dividend date. A call that is in the money before it can be exercised early.
• Earnings date, again.
• Exit price for the shares, still written down.

How to use it

Print it or copy it into your notes. Answer every line in writing, every time, even when it feels obvious. The day you skip it is the day the earnings date lands inside your trade.

Questions