The continuous wheel strategy creates systematic income by selling cash-secured puts until assignment, then selling covered calls on the acquired shares while simultaneously selling new cash-secured puts on the other side. This tutorial demonstrates managing a growing BITO Bitcoin ETF position after another assignment increased the share count to 300 shares, creating the opportunity to scale from two covered call contracts to three while continuing to play both sides of the position.
The walkthrough captures real decision making at every step: reviewing last week's executed transactions in Think or Swim, recording those transactions to the cost basis tracking system, processing the latest assignment, analyzing how dollar cost averaging has reduced the overall cost basis, and planning the next week's positions including rolling existing covered calls and adding new contracts to match the expanded inventory.
This video emphasizes the practical workflow for option sellers managing multiple simultaneous positions. The process includes checking transaction history to verify fills and collect data, entering transactions into MyATMM to maintain accurate cost basis tracking, calculating the updated cost basis with premium after the new assignment, analyzing extrinsic value remaining in existing covered calls to determine rolling timing, and selecting appropriate strikes for both new covered calls and cash-secured puts based on the current cost basis.
The systematic weekly workflow begins by opening Think or Swim and navigating to the account statement to review transactions that executed during the previous week. This verification step ensures accurate record keeping and identifies which positions filled, were assigned, or expired.
The account statement reveals a cash-secured put assignment occurred on the BITO Bitcoin ETF position. The assignment details show:
| Assignment Component | Value |
|---|---|
| Strike Price | $29.00 |
| Assignment Date | April 20, 2024 |
| Shares Acquired | 100 |
| Capital Deployed | $2,900 |
| Original Put Premium Collected | $1.05 per share |
| Actual Fill Price on Premium | $1.05 (filled better than limit) |
The assignment occurred because BITO closed below the $29 strike price at expiration on Friday, April 19. When a cash-secured put expires in-the-money (stock price below strike), automatic exercise assigns shares to the put seller at the strike price regardless of where the stock is currently trading.
The video notes that the original cash-secured put was sold with a limit order at $0.89, but actually filled at $1.05 per share—collecting an additional $16 in premium beyond the target price. This premium improvement occurred because the order was placed on Sunday when markets were closed, then executed Monday morning when market open volatility pushed the option premium higher than weekend pricing indicated.
Beyond the cash-secured put assignment, the transaction history shows covered call activity from the previous week:
Two-Contract Covered Call Sale:
A covered call position was opened selling two contracts at the $32 strike with April 26 expiration. The order targeted $0.62 per share premium but was adjusted down to $0.27 after market movement reduced available premium. The fill occurred at $0.27 × 200 shares = $54 total premium collected (minus $1.30 in commissions and fees).
The adjustment from $0.62 to $0.27 occurred because BITO moved down at Monday's market open, reducing the value of out-of-the-money call options. The video demonstrates the reality that weekend planning establishes strategic direction (which strikes, which expirations), while Monday morning execution requires tactical adjustments as live market pricing often differs from weekend projections.
With the transaction data collected from Think or Swim, the next step involves entering these transactions into the cost basis tracking system. The video jumps to the MyATMM cost basis screen and shows the completed transaction entries, though the actual data entry process was not captured on video.
The key transactions to record include:
Each transaction entry must be moved to the permanent transaction history using the helper button feature that calculates net credits/debits and records the transaction for historical tracking. This permanent history ensures monthly and annual performance calculations remain accurate and provides an audit trail for tax preparation.
After recording the assignment transaction, MyATMM recalculates the position metrics to reflect the newly acquired shares and the impact on cost basis.
The position now consists of:
The cost basis screen displays two critical metrics:
1. Cost Basis (Assignment Average): $30.83
This represents the simple average of the prices paid to acquire shares through assignments:
The video emphasizes watching this number decrease as assignments occur at lower prices. Before this assignment, the cost basis was $31.75 with 200 shares. Adding 100 shares at $29 pulled the average down to $30.83, demonstrating dollar cost averaging in action as the strategy follows BITO downward.
2. Cost Basis With Premium: $29.08
This metric factors in all premium collected from covered calls and cash-secured puts:
This $29.08 represents the effective breakeven price. If you sold all 300 shares at $29.08, you would recover all capital deployed in assignments plus you would have already collected $525 in premium that you keep regardless. This demonstrates how premium collection reduces risk by lowering the stock price needed to achieve breakeven.
Comparing the two cost basis calculations reveals the impact of premium collection:
| Metric | Without Premium | With Premium | Improvement |
|---|---|---|---|
| Cost Basis Per Share | $30.83 | $29.08 | $1.75 (5.7%) |
| Breakeven Stock Price | $30.83 | $29.08 | $1.75 lower target |
| Total Capital at Risk | $9,250 | $8,725 | $525 reduction |
The $525 in premium collected has reduced the effective cost basis by $1.75 per share. If BITO recovers to $29.08 (instead of needing to reach $30.83), the entire position breaks even. Premium collection has eliminated 100% of the paper loss that would exist if you had simply bought shares at the average assignment price without collecting any premium.
With two covered call contracts expiring April 26 (five days away) at the $32 strike and BITO trading at approximately $28, the position sits well out of the money with minimal assignment risk. However, these contracts have lost most of their time value, creating an opportunity to roll them forward to collect additional premium.
The Think or Swim position screen displays extrinsic value for each option position. The video shows the two $32 call contracts have $0.14 in extrinsic value remaining (14 cents per share).
Extrinsic value represents the time value and volatility premium still embedded in the option price. For out-of-the-money options like these $32 calls with BITO at $28, all value is extrinsic since there's no intrinsic value (the stock is below the strike). As expiration approaches, extrinsic value decays toward zero through theta (time decay).
The rolling decision framework uses extrinsic value as a key signal:
At $0.14 per share ($28 total to close two contracts), these covered calls are approaching optimal rolling territory. The video proceeds to analyze rolling options even though extrinsic sits slightly above the ideal $0.10 threshold.
The key strategic question when rolling covered calls involves deciding whether to keep the same strike ($32) or roll down to a lower strike. This decision requires analyzing the cost basis with premium calculation.
Cost Basis Constraint Analysis:
Current cost basis with premium: $29.08 per share
Any strike above $29.08 ensures profit if assigned:
Since the cost basis has dropped to $30.83 for assignments (and $29.08 including premium), the trader can now consider rolling down to the $31 strike instead of staying at $32. This lower strike:
The video demonstrates the rolling order process:
The trader evaluates whether changing the strike to $31 improves the premium collected:
The decision to roll down from $32 to $31 collects an additional $20 in premium while maintaining a strike well above the $29.08 cost basis with premium. The video proceeds with the $31 strike roll to May 3 expiration.
The video also demonstrates another rolling approach: instead of rolling out one week to May 3, what if you kept the April 26 expiration but simply rolled the strike down from $32 to $31?
By changing the expiration dropdown from May 3 back to April 26 while keeping the $31 strike selected, the net credit changes to $0.08 per share. This represents collecting $16 total ($0.08 × 200 shares) to roll the strike down $1.00 while keeping the same Friday expiration.
The trader compares the two options:
The video confirms the May 3 expiration at $31 strike and clicks to submit the rolling order. This order will execute as a simultaneous two-legged trade: buy to close the April 26 $32 calls, sell to open the May 3 $31 calls, for a net credit of $0.26 per share ($52 total for two contracts minus commissions).
With 300 total shares owned and only two covered call contracts active after the roll, 100 shares remain uncovered. These shares from the latest assignment create the opportunity to write a third covered call contract, scaling weekly premium collection by 50% compared to the two-contract position.
The rolling order established three contracts will be at the $31 strike with May 3 expiration. To maintain position simplicity and create consistent assignment scenarios, the third covered call should match these parameters:
Matching strikes and expirations across all covered calls means the entire 300-share position faces the same assignment scenario. If BITO closes above $31 on May 3, all three contracts assign simultaneously. If BITO stays below $31, all three contracts expire worthless and you keep all shares plus all premium collected.
The option chain shows pricing for the $31 call at May 3 expiration:
The video notes this is a wide spread ($0.26 difference between bid and ask), which is common when viewing option chains on Sunday when markets are closed. Weekend pricing reflects Friday's closing prices, and spreads often appear artificially wide because market makers are not actively updating quotes.
The trader discusses adding the Mark column to the option chain display to make pricing decisions easier. The Mark represents the midpoint between bid and ask, providing a target price for limit orders that typically fills during regular market hours as market makers tighten spreads.
Setting the limit order at $0.40 (slightly above the $0.34 mark) targets approximately $40 in premium for this third contract. However, the video acknowledges this Sunday pricing may change significantly when markets open Monday, requiring potential order adjustments based on live pricing.
To sell the third covered call:
The order now appears in the working orders queue. When combined with the rolling order for the two existing contracts, the total Monday morning execution plan includes:
This scales premium collection from approximately $50-60 per week with two contracts to $90-100 per week with three contracts, a 50% increase matching the 50% increase in covered share count.
The continuous wheel strategy maximizes premium collection by playing both sides simultaneously: selling covered calls on shares you own while also selling cash-secured puts to generate income from available cash and create potential for additional assignments that further build inventory.
With BITO trading around $28 and the cost basis with premium at $29.08, selecting the cash-secured put strike requires balancing premium collection against assignment desirability.
The video analyzes potential strikes for the April 26 expiration (same week, five days away):
Examining Multiple Strike Options:
| Strike | Relationship to Price | Premium Available | Assignment Risk |
|---|---|---|---|
| $28 | At the money | Higher premium | Very high probability |
| $27.50 | $0.50 below current | $0.75 mark | Moderate probability |
| $27 | $1.00 below current | Lower premium | Lower probability |
The video focuses on the $27.50 strike as the target. This strike sits $0.50 below BITO's current $28 price, providing some cushion against assignment while still collecting meaningful premium.
The option chain shows the $27.50 put for April 26 expiration pricing:
The video sets a limit order at $0.77, slightly above the $0.75 mark, targeting approximately $77 in premium (minus $0.67 in commissions and fees).
The strategic assessment of this cash-secured put:
Assignment Probability and Consequences:
If BITO drops below $27.50 by Friday's expiration, assignment will occur, adding 100 more shares at the $27.50 strike price. This fourth assignment would:
Since the $27.50 assignment price sits well below both the $30.83 average assignment cost and the $29.08 cost basis with premium, assignment at this strike is desirable. It would accelerate the cost basis reduction and position the portfolio for better performance when BITO eventually recovers.
To sell the cash-secured put:
The working orders now show all planned Monday morning executions:
This demonstrates playing both sides: collecting premium from three covered call contracts on the 300 shares owned while also collecting premium from a cash-secured put that may deliver another 100 shares if BITO continues declining.
The final step in the weekly workflow involves reconciling the cost basis tracking system's calculated account value against the broker's reported account value. This verification confirms all transactions were recorded correctly and no errors have accumulated.
The video demonstrates navigating to MyATMM's dashboard, which displays the total brokerage account value calculated from all recorded positions, cash balances, and option positions. The dashboard shows the account value: $92,325.
Switching to Think or Swim's account statement, the broker's reported account value shows: $92,325.
The exact match confirms:
This weekly reconciliation provides confidence that the cost basis calculations and premium tracking are mathematically correct. If the values did not match, it would indicate a missing transaction, duplicate entry, or data entry error requiring investigation and correction.
Beyond account value reconciliation, the dashboard displays premium collection statistics. The video shows April 2024 premium collected to date: $525.00.
This monthly tracking provides context for evaluating strategy performance:
The $525 collected in April on a position requiring approximately $9,250 in capital represents a 5.7% monthly return, or approximately 68% annualized if this rate continued consistently (though option premium varies significantly based on market volatility and price movement).
One of the most important strategic discussions in this video involves deciding when to accept cash-secured put assignments versus rolling positions forward to avoid taking shares. The approach demonstrated—accepting repeated assignments to build a large share position—represents one valid strategy, but not the only approach.
The video shows accepting every cash-secured put assignment, building the position from zero shares to 300 shares through three assignments at $32, $31.50, and $29. This assignment-focused approach:
Advantages:
Disadvantages:
The video acknowledges an alternative approach: rolling cash-secured puts forward instead of accepting assignments. This approach keeps positions in option form rather than converting to shares:
When to Roll Cash-Secured Puts:
Rolling Mechanics:
Capital Efficiency Example:
A trader with $25,000 capital could choose between:
The rolling strategy provides exposure to multiple stocks and collects premium from multiple positions while keeping capital flexible. The assignment strategy concentrates into a single position but creates covered call inventory that can generate consistent weekly income as long as the position is held.
Many option sellers use a hybrid strategy:
The video emphasizes that there is no single correct approach—the decision depends on capital availability, portfolio goals, conviction in the underlying stock, and whether you prefer share ownership or option positions.
Managing the continuous wheel strategy with multiple contracts requires systematic workflow, accurate transaction tracking, and strategic decision making about rolling timing and strike selection. The process demonstrated scales efficiently as position size grows through assignments.
The position demonstrated scaled from zero shares to 300 shares through three assignments:
| Assignment | Strike Price | Total Shares | Covered Calls | Weekly Premium Potential |
|---|---|---|---|---|
| First | $32.00 | 100 | 1 contract | $15-25 |
| Second | $31.50 | 200 | 2 contracts | $30-50 |
| Third | $29.00 | 300 | 3 contracts | $45-75 |
Each assignment increases covered call inventory proportionally, scaling weekly premium collection without increasing per-contract management complexity. The workflow remains the same whether managing one contract or ten contracts.
The three assignments demonstrated the power of dollar cost averaging:
The combination of dollar cost averaging through assignments at lower prices plus premium collection reducing effective cost created a $2.92 per share improvement from the initial $32.00 assignment to the current $29.08 effective cost basis—a 9.1% reduction in breakeven price while BITO declined.
Managing multiple covered calls and cash-secured puts across assignment events requires tracking dozens of transactions monthly: option sales, assignments, stock purchases, premium collection, commissions, and fees. Manually tracking this data in spreadsheets introduces formula errors, missing transactions, and cost basis calculation mistakes.
MyATMM automates the complex calculations demonstrated in this video:
The platform eliminates the manual math that consumed significant time in the video workflow, instantly recalculating cost basis after every assignment and showing exactly which covered call strikes ensure profit if assigned based on current cost basis with premium.
For option sellers managing the continuous wheel strategy across multiple stocks, MyATMM provides the systematic tracking foundation that allows scaling positions confidently while maintaining cost basis accuracy for both performance tracking and tax preparation.
Options trading involves significant risk and is not suitable for all investors. Selling cash-secured puts obligates you to purchase shares at the strike price if assigned, which can result in substantial losses if the underlying stock declines significantly. The continuous wheel strategy demonstrated requires sufficient capital to handle multiple assignments, and accumulated positions can show large unrealized losses during sustained market declines.
Rolling covered calls extends positions but does not eliminate assignment risk. If the stock price rises above the strike, assignment will occur regardless of previous rolling. Accepting repeated assignments as demonstrated concentrates capital into a single position and reduces diversification.
BITO carries unique risks as a Bitcoin futures-based ETF including extreme volatility, Bitcoin price risk, futures market risks, tracking error relative to Bitcoin spot prices, and regulatory uncertainty surrounding cryptocurrency markets. The monthly dividends mentioned are not guaranteed and vary based on futures market conditions.
Premium collection amounts shown represent specific transactions in paper trading and do not represent guaranteed or typical returns. Actual premium varies significantly based on market volatility, stock price movement, strike selection, and time to expiration. Past performance does not guarantee future results.
This content is for educational purposes only and should not be considered financial advice. Always consult with a qualified financial advisor before implementing options strategies or making investment decisions.
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