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The wheel in a bull market: what you give up, in numbers

In a strong rising market the wheel doesn't lose money. It loses the race. You get called away, the stock keeps going, and the plain shareholder next to you ends the year far ahead. Here's that year in numbers, because the gap is bigger than most people expect.

Options guide · 9-minute read · Updated 2026-10-26

The problem in one line

A Covered call caps your gain at the strike. A Cash-secured put only gets you shares if the stock falls. In a market that keeps rising, the first keeps selling your shares too cheap and the second keeps you out. The wheel strategy was built for a stock that wobbles, not one that runs.

This page isn't about losing money. It's about what you give up. That's a real cost, even though it never shows up as a red number.

One rising year, leg by leg (an illustration, not a trade idea)

A made-up stock, XYZ, starts the year at $50 and ends at $80, climbing most months. You run the wheel with 30-day options, puts about 10% below the price, calls about 8% above your cost.

Add it up. Premiums: $1,170. Share gains: ($5,000 − $4,700) + ($6,000 − $5,700) = $600. Year total: +$1,770.

A plain holder who bought 100 shares at $50 in month one and did nothing: +$3,000.

The wheel made money every single month and finished the year $1,230 behind someone who did nothing at all. That's the trade-off. It never looks like a loss on the statement. It's a loss against the alternative.

Why the gap is that big

Three things happened in that table, and they always happen in a run.

• You were out of the stock most of the year. Eight of twelve months, the put expired and you owned nothing while the stock rose.
• When you did own it, you sold it cheap. Called away at $50 in a month the stock reached $55. At $60 in a month it reached $66.
• The put strike chased the price up and never caught it. You kept promising to buy 10% below a price that kept rising.

The premiums are the consolation. In a run, they're a small one.

Could you have done better inside the wheel?

A little. Selling calls further above your cost keeps more upside, at the cost of a smaller premium. Selling puts closer to the price gets you assigned more often, at the cost of a worse entry when the stock does fall. Neither fixes the shape. A strategy that sells upside will always lag when upside is what's on offer.

The one real fix is to not sell the call on shares you'd rather hold through a run. That's not the wheel any more; that's owning stock. See covered call or sell the shares and roll up vs let it get called.

The honest trade-off

The wheel gives up about 40% of the run to lose less in the fall and collect in the flat. If you believe the stock is about to run hard, the wheel is the wrong tool for that stock, that year. The trouble is that nobody knows that in advance, which is why people end up choosing by temperament: would you rather miss some of a run, or eat all of a fall?

What to do in a market that's running

• Don't chase. Selling closer puts to "get in" means buying near the top with a thin cushion if it turns.
• Don't roll calls up forever. Rolling up to keep shares that are running usually costs more than it saves. See rolling a covered call up and out.
• Accept the call-away. You chose the strike. Take the gain, go back to cash, sell the next put. Resenting a profit is a bad habit.
• Keep a few shares you don't wheel, if you want some of the run. Decide that up front, not after the stock has left.

Questions