Getting assigned on a cash-secured put doesn't have to be a setback. In fact, it's a strategic opportunity within the continuous wheel strategy to reduce your cost basis and play both sides of the market simultaneously.
In this detailed walkthrough, we explore a real-world scenario where a cash-secured put on Marvell Technology Inc (MRVL) resulted in assignment at $44.50 per share. Rather than viewing this as a problem, the assignment creates an opportunity to sell two covered calls at a reduced cost basis while simultaneously opening a new cash-secured put position to collect approximately $214 in total premium for the week.
This is the power of the continuous wheel strategy: whether the stock moves up, down, or sideways, you're positioned to collect option premium while systematically managing your cost basis through assignments and rolling positions.
The first step after assignment is accurately recording the transaction. This is where cost basis tracking becomes critical. Manual spreadsheet tracking often leads to errors, especially when managing multiple positions across different strike prices and expiration dates.
Starting at the MyATMM platform, the position showed:
Because the stock closed below the $44.50 strike price, the put seller is obligated to purchase 100 shares at the strike price. This is processed automatically by your broker on expiration day.
The MyATMM platform streamlines this process:
The platform automatically generates proposed records showing what your cost basis would be at $44.50 per share for these 100 shares. This prevents manual data entry errors and ensures accurate tracking across all your positions. Once you click Save, the $44.50 cost basis is officially recorded, and you can delete the closed cash-secured put from your active positions.
After recording the assignment, the platform showed:
This $1.00 reduction in cost basis is crucial. It means you can now sell covered calls at $45.50 instead of $46.50, getting closer to at-the-money strikes where premium values are highest.
One of the most powerful yet underappreciated aspects of the continuous wheel strategy is how cash-secured put assignments naturally implement dollar-cost averaging into your position management.
Here's how the math works in this MRVL example:
By purchasing shares at a lower price through assignment, you've effectively reduced your average cost per share by $1.00. This isn't just accounting—it has real strategic implications for your option selling.
This is why selling both cash-secured puts and covered calls (playing both sides) creates such a robust income strategy. As the stock price declines:
The continuous wheel strategy with bilateral trading (both puts and calls) excels in these market conditions:
With 200 shares now owned and an updated cost basis of $45.50, it's time to establish new positions to collect the next week's premium. This involves placing two separate orders in the thinkorswim platform.
The cash-secured put is the simpler of the two trades because it follows a consistent rule: sell at-the-money for maximum premium collection.
Trade Details:
The bid-ask spread was about $0.05, so pricing the order $0.02 above the bid ($0.03 below the ask) positions it competitively for quick execution while maximizing premium collection.
With 200 shares owned, you can sell two covered call contracts (each contract covers 100 shares). The key is targeting the $45.50 strike price, which matches your new cost basis.
Trade Details:
By selling at the $45.50 strike, any assignment would result in breaking even on the stock position while keeping all collected premium as pure profit. This is the beauty of trading at your cost basis—downside is managed while upside captures both stock appreciation and option premium.
Cash-Secured Put: ~$100
Covered Calls (2 contracts): ~$114
Total Expected Income: ~$214 for the week
For just a few minutes of work placing these orders, the strategy generates over $200 in weekly income. Annualized, this approach can produce substantial returns on the capital deployed in the underlying position.
After submitting both orders, they enter "queued" status, meaning they're working in the market but not yet filled. The next trading day requires monitoring:
While the continuous wheel strategy is relatively conservative compared to many options strategies, proper risk management remains essential for long-term success.
1. Stock Selection Matters
This strategy works best with quality underlying stocks you're comfortable owning long-term. MRVL (Marvell Technology) is a semiconductor company with real business fundamentals. If assigned repeatedly, you're accumulating shares in a company with actual value, not speculative assets.
2. Capital Requirements
Each cash-secured put requires cash collateral equal to the full assignment value. In this example:
3. Assignment Risk is a Feature, Not a Bug
Unlike many options strategies where assignment is problematic, the wheel strategy embraces assignment as part of the income generation cycle. However, you must be prepared to:
4. Unrealized Losses Are Temporary
The position shows a $272 unrealized loss, but this is only a paper loss while holding the shares. As long as you continue collecting premium and the underlying company remains fundamentally sound, time and premium collection work in your favor.
Managing the continuous wheel strategy manually through spreadsheets quickly becomes overwhelming. Every assignment, every option expiration, every premium collection impacts your cost basis calculation. Miss one entry, and your entire position tracking becomes unreliable.
Consider what you'd need to track manually for just this single MRVL position:
Now multiply this complexity by 5, 10, or 20 different ticker symbols, each with their own unique assignment histories and rolling positions. The tracking becomes a full-time job.
The MyATMM platform automates this entire process:
Automatic Cost Basis Calculation
When you record an assignment, the platform immediately calculates and displays your new average cost per share. No formulas to write, no calculator needed—just accurate, instant results.
Proposed Records for Planning
Before finalizing transactions, you can see proposed cost basis records. This helps you plan your next covered call strikes before committing to positions, ensuring you're targeting the right price points for your strategy.
Portfolio-Wide Tracking
Switch between detailed ticker views and portfolio summary with a single click. See your total premium collected, unrealized gains/losses, and overall performance across all positions simultaneously.
Premium History
Every option premium is automatically tracked and factored into your true cost basis. The platform shows you're over $1,000 in collected premium on MRVL—information that would require extensive spreadsheet digging to calculate manually.
The continuous wheel strategy isn't about hitting massive winning trades. It's about consistent, reliable income generation week after week. This MRVL position perfectly illustrates the approach.
Generating approximately $214 in a single week from one underlying position might not sound dramatic, but consider the annualized implications:
This income is generated from a position requiring approximately $9,100 in capital (200 shares at $45.50). That represents a potential annual return exceeding 100% on deployed capital—and this is from a relatively conservative options strategy.
Of course, actual results will vary based on several factors:
But even accounting for weeks with lower premium, market pullbacks, and occasional adjustments, the strategy can produce substantial income for dedicated practitioners.
Perhaps most importantly, this strategy requires minimal time investment:
For 20 minutes of work to generate $214 in income, that's an effective hourly rate exceeding $600. Few legitimate strategies offer this combination of time efficiency and income potential.
After placing the orders for two covered calls and one cash-secured put, the work isn't quite done. Successful option sellers actively monitor positions and make adjustments as needed.
When the market opens the next day, check your order status:
If Orders Filled:
If Orders Not Filled:
Throughout the week, watch for opportunities to:
As expiration approaches, several outcomes are possible:
Covered Calls:
Cash-Secured Put:
Notice how regardless of the outcome, you're positioned to continue the strategy. Assignment leads to new positions, expirations lead to new positions. The wheel keeps turning, and premium keeps flowing into your account week after week.
Options trading involves significant risk and is not suitable for all investors. Past performance does not guarantee future results. Cash-secured puts require substantial capital reserves, and assignment results in stock ownership that may decline in value. Covered calls cap upside potential, and you may miss significant gains if the underlying stock rallies. This content is for educational purposes only and should not be considered financial advice. The continuous wheel strategy requires active management and understanding of options mechanics. Always consult with a qualified financial advisor before making investment decisions, and never risk more capital than you can afford to lose.
Stop struggling with complex spreadsheets and start managing your options trades like a pro. MyATMM gives you instant cost basis calculations, assignment tracking, and portfolio-wide performance metrics—all in one simple platform.
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