Home › Guides › Options: the wheel

The wheel vs just selling covered calls: when to skip the put

If you already own 100 shares of a stock you like, you don't need the wheel. You need the covered call, which is the wheel's second half. The put leg only matters when you're in cash and want in at a lower price. Here's how to choose.

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

The difference in one line

The wheel strategy starts in cash, sells a put to get the shares, then sells calls. Covered calls only starts with shares you already own and sells calls. The second is the first with step one removed.

So the real question isn't "which is better." It's "do I own the shares yet, and do I want to?"

When covered calls only is the right choice

• You already own 100 shares of a stock you'd keep, and wouldn't mind selling at a higher price.
• You want to collect premium without adding more of the stock. A put would mean buying 100 more if assigned.
• Your account is in a plan that allows calls but not puts. In Canada, covered calls are widely allowed in a TFSA or RRSP, while cash-secured puts depend on the broker; permissions differ by broker everywhere.
• You've been assigned once and don't want to be assigned again. Finish the call half, get called away, then decide fresh.

See covered call on shares you already own.

When the put leg earns its place

• You're in cash and want the stock, but lower. The put is a limit order that pays you to wait. See cash-secured put vs limit order.
• You don't mind which of two things happens: keep the premium, or buy at the strike. If one of those would upset you, skip the put.
• You can size it as a share purchase. The strike times 100 fits your cap for one stock.

If you'd only sell the put for the premium and dread the assignment, that's a reason not to, whatever the premium.

Side by side (an illustration, not a trade idea)

A made-up stock, XYZ, is at $50. Trader A already owns 100 shares bought at $50. Trader B is in cash and wants in at $46.

Trader A sells a 30-day $54 call for $1.00. Trader B sells a 30-day $46 put for $1.00.

Both lose in the $38 row. Trader B loses less because the put got in lower. In the $56 row, Trader A made more because they owned the stock. Neither is "safer." They're the same risk at different entry points.

What changes if you already own the shares

Your Cost basis is whatever you paid, not a put strike minus a premium. If you bought at $50 and the stock is $44 now, a call above $50 pays pennies and a call at $46 locks in a loss if called. That's the trap the put half avoids by getting in lower.

So for covered-call-only traders, the question "would I sell a call below my cost?" comes up more often. Our answer is no. See the strike below cost trap.

The call-half decisions are the same either way: strike above cost, 30 to 45 days, no earnings inside, let it go if called. See covered call strike selection.

Which should you do this month?

1. Own 100 shares you'd keep? Sell the call. Skip the put.
2. In cash, want the stock lower, fine with either outcome? Sell the put.
3. In cash, don't really want the stock? Do neither on that name.
4. Own shares and want more at a lower price? Both, sized so the total fits your cap.

Case 4 is the full wheel. Cases 1 and 2 are each half on its own. Most months, one half is enough.

Questions