Home › Guides › Options: capital & accounts

The wheel strategy with $25,000: several names and real caps

At $25,000 the wheel becomes a small portfolio. You can hold several names and some ETFs. The job shifts from picking the right stock to setting caps that limit what any one bet, or one bad market, can do.

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

The short answer

With $25,000 you can run the wheel strategy on four to six positions, including one or two lower-priced ETFs. Each cash-secured put still needs the strike times 100 in cash.

The bigger change is how you think. At this size, you need written caps: the most one stock can take, the most one industry can take, and a slice of cash you never use. Those caps do more for you than any single pick.

What about SPY-class ETFs?

The biggest index ETFs, like SPY, trade at several hundred dollars a share. One put on them needs tens of thousands of dollars set aside. At $25,000, that would be most or all of your account in one position.

So at this size, an ETF slice usually means lower-priced ETFs: some funds track broad indexes or single sectors at prices a $25,000 account can handle. Check each fund's price, its options volume and its spread before you use it. Our guide on single stock vs ETF for the wheel compares the two.

Why bother with ETFs at all? An ETF holds many companies, so one company's bad news hurts it less. Its premium is usually smaller, because it tends to move less than a single stock. You're trading some premium for calmer positions.

A worked example (an illustration, not a trade idea)

Here's one way to lay out $25,000. All names are made up.

The caps behind it:

• No single stock above 20% of the account ($5,000).
• No single industry above 30%, counting ETFs that lean on that industry.
• 20% of the account held as cash that never backs a trade.

What different months do to it

Each loss below is the share loss after assignment, plus the premium.

Two things to see:

1. Caps protect you from one company. CCC's bad month barely dents the account.
2. Nothing at this size protects you from the market. When everything falls together, a wheel portfolio loses much like a portfolio of the same stocks.

That's not a flaw in the wheel. It's what owning stocks, or promising to buy them, means.

Sizing caps, and why they're written down

A cap only works if it's set before the pressure arrives. Here's why each one exists:

• The per-stock cap stops one great-looking premium from becoming half your account. See position sizing for selling options.
• The per-industry cap stops five "different" stocks from being one bet. Chip makers, banks or oil producers often fall together. See diversifying a wheel portfolio.
• The unused cash covers fees, gives you room to act after a drop, and keeps you from forced choices. See keeping cash aside for assignment.

The hardest moment to keep a cap is after a drop. A stock you own has fallen, and its puts now pay much more. Selling another one feels like a bargain. That's exactly when a cap earns its keep.

Running it week to week

Four to six positions means more upkeep. A few habits help:

1. Stagger expiry dates so you don't face every decision on one Friday.
2. Track each position's stage: put open, assigned, call open, called away. See wheel strategy tracking spreadsheet.
3. Check every earnings date before each new put.
4. Keep one contract per name until you've closed a good number of trades. See how many contracts to sell.
5. Count the account weekly: cash set aside, shares held, cash free. Make sure the caps still hold after any assignment.

A note on accounts. In the US, many brokers allow covered calls in an IRA, and some allow cash-secured puts. In Canada, covered calls are widely allowed in a TFSA or RRSP, while cash-secured puts depend on the broker. Options permissions differ by broker, so check yours. Taxes differ by account type too; see taxes on selling options in the US.

What to do next

1. Write your three caps: per stock, per industry, and unused cash.
2. Build a table like the one above with names you'd actually hold.
3. Fill in the "market falls" and "sharp crash" rows with your numbers.
4. If the crash row is more than you'd sit through, lower the strikes, raise the cash slice, or add more ETF weight.
5. As the account grows, the caps matter even more. See the wheel with $100,000.

Questions