Cash-secured puts are often presented as one of the simplest ways to generate options income.

You sell a put.

You collect premium.

If the stock stays above the strike price, the option may expire worthless.

If the stock falls below the strike, you may be assigned 100 shares at a price you agre

You sold a cash-secured put because you were comfortable owning the stock at the strike price.

Then the stock starts falling.

Your short put moves into the money.

The premium you collected no longer feels like the main part of the trade.

Now there is a different question:

You have decided there is a stock you would like to own.

It is trading at $105.

You would be comfortable buying it at $95.

Now you have two choices.

On the surface, the cash-secured put ca

The Wheel strategy is often presented as a simple way to collect options premium again and again.

Sell a put.

Collect premium.

If assigned, own the stock.

Sell a covered call.

Collect more premium.

If the shares are called away, start over by selling another put.

That is the basic cycle.

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