One of the most satisfying moments for option sellers practicing the continuous wheel strategy is successfully closing a position with both premium income collected and capital appreciation realized. After managing Bath & Body Works (BBWI) through 15 transactions over approximately 60 days, the position reached a natural exit point: selling the shares above the cost basis for a small capital gain while keeping all accumulated option premium.
This demonstration provides a complete walkthrough of the closing process, from executing the share sale in your brokerage platform to properly recording the closeout in MyATMM's cost basis tracking system. More importantly, it illustrates how to calculate total returns from a completed wheel strategy cycle, combining option premium collected throughout the position's life with any capital gains or losses on the underlying shares.
The continuous wheel strategy isn't just about collecting premium indefinitely on the same position—it's about systematically generating income while maintaining the flexibility to exit when conditions warrant. Whether you're closing because the stock price has risen above your preferred trading range, fundamentals have changed, or you've simply achieved your target return, understanding how to properly close positions is essential for long-term success with this strategy.
Before executing any position closeout, you should review the current status to understand exactly what you own, what your cost basis is, and what price target makes sense for exiting profitably. The BBWI position demonstrates this review process clearly.
The position consisted of 200 shares of BBWI with a current cost basis of $46.50 per share after accounting for all option premium collected during the position's life. This cost basis wasn't the original purchase price—it reflected all the cash-secured put assignments, covered call sales, and premium adjustments that occurred across multiple wheel cycles.
This is precisely where accurate cost basis tracking becomes critical. Your brokerage statement might show various purchase prices depending on when different share lots were acquired through assignments. But your true economic cost basis—the price you need to exceed to realize a capital gain—is $46.50 after factoring in all premium collected. Without tools like MyATMM tracking this adjusted cost basis, you're making exit decisions based on incomplete information.
The decision to close the position at $46.50 reflects a strategic choice: exit at the cost basis to ensure all premium collected converts to pure profit, with any capital gain above that price being additional bonus returns. This conservative exit strategy guarantees profitability while allowing the market to provide potential upside if the shares gap higher at open.
Rather than setting an aggressive target well above cost basis (which risks missing the exit if the stock pulls back), the approach prioritizes certainty. You already collected substantial option premium over 60 days—the capital gain portion is secondary. This mindset shift is important for wheel strategy practitioners: the premium is the primary profit source, and capital gains are welcome additions but not requirements for success.
The limit order was placed at $46.50 on March 24th after market hours, targeting execution at the following day's open. This overnight order placement reflects confidence that BBWI would open at or above the cost basis price, making the fill likely within minutes of market open.
The order filled on March 25th about one minute after market open at $47.09—59 cents above the cost basis target. This gap-up open demonstrates the value of setting reasonable exit targets rather than chasing higher prices. By accepting $46.50 as the minimum acceptable exit price, the position captured an additional 59 cents per share when the market opened strong. Had the target been set at $48 or $49, the shares might still be held waiting for a price that may never materialize.
After the shares sell in your brokerage account, the next critical step is properly recording the closeout transaction in your cost basis tracking system. This ensures your records reflect the completed cycle and accurately calculate total returns. The demonstration walks through MyATMM's process for recording share sales that close positions.
After logging into MyATMM, the platform directs you to the dashboard showing all positions. From there, navigating to the Cost Basis page and selecting the BBWI ticker displays the current position details: the 200 shares owned across two separate transaction records, each showing 100 shares.
The fact that shares appear in two separate records isn't unusual—this often happens when you're assigned shares at different times through multiple cash-secured put assignments. MyATMM tracks each assignment separately while calculating your overall weighted average cost basis across all shares. For closing purposes, you need to record the sale against each lot individually to properly zero out the position.
The demonstration emphasizes pulling up the brokerage platform's data alongside MyATMM to ensure the closeout transaction is recorded accurately. Thinkorswim shows the sale occurred at $47.09 per share for all 200 shares. This sale price becomes the closeout price you'll enter in MyATMM for each share lot.
Accuracy matters here because this closeout price determines your calculated capital gain or loss on the shares. If you round or estimate the sale price, your performance tracking won't accurately reflect the actual results. Take the extra 30 seconds to verify the exact fill price from your brokerage confirmation rather than relying on memory or approximation.
MyATMM's Cost Basis page shows the current holdings and provides an interface for closing positions. The process involves specifying the closeout price ($47.09) for each share lot. Because the position consists of two separate 100-share lots, the closeout is entered twice—once for each lot.
The platform calculates the math automatically: if your cost basis was $46.50 and you sold at $47.09, the per-share capital gain is $0.59. Multiply by 100 shares per lot equals $59 per lot before fees. The demonstration notes there are 16 cents total in commission fees that should be allocated across both lots (8 cents each) to accurately reflect net proceeds.
After entering the closeout information, clicking Submit generates "proposed records" showing both the original purchase transaction (the assignment that gave you the shares) and the new sell-to-close transaction. These proposed records appear in a review section where you can verify all details before finalizing them into your permanent position history.
The proposed records section is where you make any necessary adjustments for fees or commissions. The demonstration adds 8 cents in fees to each of the two sell-to-close transactions to account for the 16 cents total commission. These small fee adjustments ensure your net profit calculations reflect actual cash received rather than gross proceeds.
After reviewing the proposed records and confirming all details are correct, you move each transaction from proposed to confirmed status by clicking Save. This action finalizes the records and updates your position status to show zero shares owned and a completed position history.
The demonstration shows the final result: the BBWI position now displays no shares owned, option premium collected of $88.11, capital gain of $17.84, and total gain of $105.95. These summary statistics provide the complete performance picture for the 60-day position—you can see at a glance that this wheel strategy cycle was profitable and how the returns broke down between premium income and share appreciation.
The total return from the BBWI position came from two distinct sources: option premium collected throughout the position's life and capital gain realized when shares were sold above cost basis. Understanding this breakdown is essential for evaluating wheel strategy performance and optimizing your approach over time.
The $88.11 in option premium represents income collected from selling cash-secured puts and covered calls during the approximately 60 days the position was active. This premium income was realized throughout the position's life—you didn't have to wait until closeout to collect it. Each week, premium from expired or closed options hit your account as cash you could spend, reinvest, or use to secure additional positions.
This is the beauty of option premium as an income source: it's immediate and realized regardless of what happens to the underlying stock price later. Even if BBWI had declined significantly after you collected the premium, that premium was already in your account contributing to total returns. Capital gains or losses on the shares are separate considerations that layer on top of the premium income foundation.
The $88.11 collected over 60 days represents approximately $1.47 per day in income from this position. Scaled across a portfolio of multiple wheel strategy positions, this daily income accumulation creates consistent cashflow that compounds over time as you deploy proceeds into additional positions.
The $17.84 capital gain came from selling the shares at $47.09 when the cost basis was $46.50, minus commissions. This capital gain was not guaranteed—if BBWI had declined before you chose to exit, you might have sold at a small loss on the shares while still maintaining positive total returns due to the premium collected.
The fact that this capital gain is relatively small compared to the option premium collected ($17.84 vs. $88.11) is actually typical for conservative wheel strategy implementation. You're not targeting large capital gains on shares—you're targeting consistent premium income. Any capital appreciation is welcome but not required for the strategy to be profitable.
Some wheel strategy practitioners intentionally sell covered calls below their cost basis to maximize premium collection, accepting that assignment would result in a small capital loss on shares. In those cases, total returns depend entirely on premium collection exceeding any share losses. The BBWI example shows the ideal scenario where both components contribute positively to total returns.
The combined total return of $105.95 ($88.11 premium + $17.84 capital gain) on the capital commitment represents a 6.7% return over approximately 60 days. Annualizing this return (assuming similar results could be maintained) would project to roughly 40-50% annualized return—an exceptional result for a conservative income strategy with limited downside risk.
However, this annualized projection should be viewed with appropriate caution. The strategy doesn't generate 6.7% returns every 60 days consistently—sometimes premium will be lower, sometimes positions will be held longer, and sometimes share prices will move against you requiring additional capital deployment to dollar-cost-average down. The 6.7% result represents a successful cycle but not a guaranteed rate.
What the result does demonstrate is the potential of systematic wheel strategy implementation. By selecting quality underlying stocks, managing cost basis carefully, collecting premium consistently, and exiting when conditions favor closing the position, you can generate returns significantly exceeding traditional buy-and-hold or dividend-focused strategies.
| Metric | Value |
|---|---|
| Position Duration | ~60 days (15 transactions) |
| Option Premium Collected | $88.11 |
| Capital Gain on Shares | $17.84 |
| Total Return | $105.95 |
| Return Percentage | 6.7% in 60 days |
| Annualized Equivalent | ~40-50% (not guaranteed) |
The demonstration references a previous wheel strategy position on Marvel (MRVL) that was also successfully closed with profit. Comparing these two completed cycles provides insight into how different underlying stocks perform within the same strategy framework.
The Marvel position lasted considerably longer than BBWI—approximately 5-6 months across 32 total transactions. The final result showed option premium collected and a small capital gain, with total profit of $389.97. This longer duration reflects either a different market environment when Marvel was being traded or a stock that required more management through multiple assignments and rolling adjustments.
The fact that Marvel required 32 transactions versus BBWI's 15 transactions suggests Marvel spent more time fluctuating around the strike prices, getting assigned frequently and requiring active covered call and cash-secured put management. This isn't necessarily negative—more transactions mean more opportunities to collect premium, though it also requires more active monitoring and execution.
What these two examples demonstrate is that the continuous wheel strategy framework applies consistently across different underlying stocks while producing varying results based on each stock's specific price behavior and volatility. BBWI completed a cycle faster with fewer transactions, while Marvel took longer but ultimately produced larger absolute profits (though on a potentially different capital base).
This variability is why diversification across multiple positions is valuable. Rather than committing all capital to a single ticker and hoping it behaves ideally, spreading capital across 3-5 different wheel strategy positions averages out the individual stock differences and creates more consistent portfolio-level returns. Some positions will be quick winners like BBWI, others will require patient management like Marvel, and the combined portfolio generates steady income from all of them.
Each completed wheel strategy cycle provides data for refining your approach. Questions to consider when reviewing closed positions include:
The demonstration notes that both Marvel and BBWI have appreciated significantly—Marvel into the $70s and BBWI into the $50s. This appreciation is actually one reason for exiting and moving to new tickers rather than continuing the wheel on these same stocks. The next section explores this ticker selection consideration in detail.
After successfully closing the BBWI position, the demonstration discusses the rationale for moving to different tickers rather than immediately re-entering the wheel strategy on BBWI or Marvel. This decision reflects important risk management and capital efficiency considerations for wheel strategy practitioners.
The preferred trading range for this wheel strategy implementation is stocks priced in the $40 range or below. The threshold represents a balance between generating meaningful option premium (lower-priced stocks often have lower absolute premium) and managing downside risk if the stock declines significantly.
With BBWI now trading in the $50s and Marvel in the $70s, both tickers have moved above the preferred price range. This doesn't mean they're bad stocks or that the wheel strategy can't work on them—it means the risk profile has changed. A 50% correction on a $70 stock drops it to $35, requiring substantial capital to average down by selling cash-secured puts at lower strikes. A 50% correction on a $40 stock only drops it to $20, where managing the position and averaging down is more feasible with typical retail account sizes.
The demonstration explains the math clearly: if you start a wheel strategy position on a $40 stock and it declines to $20, selling cash-secured puts at $20 strike only requires $2,000 per contract in securing capital. If you started at $150 per share and it declined to $75, each cash-secured put requires $7,500 in securing capital—nearly four times as much capital commitment for similar volatility exposure.
This capital efficiency consideration becomes critical during sustained downtrends when you're dollar-cost-averaging by selling additional cash-secured puts at lower strikes. The lower your starting price, the less absolute capital required to manage through downturns. This allows retail traders with limited capital to actively manage positions rather than being forced to stop selling puts because strikes require more capital than available in the account.
Another advantage of exiting appreciated positions and moving to new tickers is forced diversification. Rather than maintaining the same stocks indefinitely (which concentrates risk in those specific companies), rotating to different tickers after completing successful cycles exposes you to different sectors, volatility profiles, and fundamental characteristics.
This rotation strategy also keeps you actively evaluating new opportunities rather than becoming complacent with familiar positions. Each new ticker selection requires fundamental research, options liquidity verification, and strategy parameter optimization—this active engagement typically improves results compared to "set it and forget it" approaches.
The decision to exit BBWI and Marvel doesn't mean these tickers are permanently excluded from consideration. The demonstration notes that if prices retreat back to the preferred $40 range and fundamentals remain solid, both stocks would be candidates for re-entering the wheel strategy.
This flexible approach treats ticker selection as dynamic rather than permanent. Stocks rotate in and out of your preferred trading range based on market conditions, and your capital follows the best opportunities available at any given time. This opportunistic mindset maximizes premium collection potential while maintaining disciplined risk management.
With the BBWI position successfully closed and capital now available for deployment, the next step is identifying a new ticker that fits the wheel strategy criteria. The demonstration concludes by mentioning that the following video will focus on finding the next position to demonstrate the continuous wheel strategy with a different stock ticker.
Based on the discussion throughout this demonstration, the ideal next position should meet several criteria:
These criteria ensure the selected ticker offers good premium collection potential while maintaining manageable downside risk and acceptable capital requirements for average retail accounts.
MyATMM provides screening tools specifically designed to identify wheel strategy candidates that meet these criteria. The Covered Call Screen and Option Search features allow filtering by price range, dividend status, minimum ROI thresholds, and option availability. These screens dramatically reduce the time required to identify suitable candidates compared to manually researching hundreds of potential tickers.
After applying appropriate filters, you typically end up with a manageable list of 10-20 candidates that warrant deeper research. From there, you can evaluate specific option chains, review recent price action and volatility trends, and assess fundamental quality before committing capital.
The decision to continue demonstrating the continuous wheel strategy on different tickers provides valuable learning opportunities. Rather than showing a single position and declaring victory, cycling through multiple stocks demonstrates how the strategy adapts to different market conditions, price ranges, and volatility environments.
This variety helps viewers understand that successful wheel strategy implementation isn't about finding one perfect stock—it's about applying consistent processes across whatever opportunities the market presents. Some positions will complete quickly like BBWI, others will require patient management like Marvel, but the systematic approach generates returns consistently across all of them.
This complete cycle demonstration on BBWI provides several important lessons for continuous wheel strategy practitioners:
Knowing your true cost basis after accounting for all premium collected is critical for making informed exit decisions. Without accurate tracking, you might hold positions longer than optimal hoping for prices to reach levels that would actually result in losses once premium is factored in, or you might exit too early missing additional profitable premium collection opportunities.
The BBWI position generated $88.11 in option premium versus $17.84 in capital gains. This 5:1 ratio demonstrates that wheel strategy returns primarily come from systematic premium collection rather than betting on stock price appreciation. Maintaining this focus ensures you select strike prices and expirations that maximize premium rather than speculating on directional moves.
Fifteen transactions over 60 days means actively managing the position roughly every 4 days on average. This isn't passive income—it requires regular monitoring, trade execution, and adjustment decisions. The payoff for this active management is 6.7% returns in two months, but it's important to understand the time commitment required.
Setting a reasonable exit target at cost basis and executing when that target is hit demonstrates the discipline required for consistent profitability. Avoiding the temptation to hold for higher prices protects the premium already collected and allows capital redeployment into new opportunities rather than being tied up indefinitely in appreciated positions.
Properly recording the complete transaction history and final results creates a performance database for refining your approach over time. Reviewing what worked and what could be improved across multiple completed cycles is how you develop expertise and optimize your wheel strategy implementation.
When closing any wheel strategy position, ensure you've completed these steps:
The successful completion of the BBWI wheel strategy position with a 6.7% return in under 60 days demonstrates the viability of this systematic income generation approach. By selling cash-secured puts, managing assignments through share ownership, selling covered calls, and eventually exiting when conditions favor closing the position, the strategy generated returns significantly exceeding what passive buy-and-hold would have achieved during the same period.
The process walkthrough—from reviewing position status before exit to recording the closeout transaction with proper cost basis adjustments—illustrates the operational details required for successful implementation. These mechanics matter: sloppy tracking, missed transactions, or inaccurate cost basis calculations undermine your ability to make optimal decisions and accurately measure performance.
The comparison to the previous Marvel position reinforces that this wasn't a lucky one-time result. Different stocks with different price behaviors both produced profitable outcomes using the same continuous wheel strategy framework. This consistency across multiple tickers suggests the strategy's profitability comes from the systematic approach rather than stock-picking skill or fortunate timing.
The decision to exit BBWI and Marvel due to price appreciation above preferred trading ranges demonstrates proper risk management. While continuing the wheel strategy on $50-70 stocks would still generate premium, the capital efficiency and downside risk profile favors rotating to lower-priced tickers where the same capital commitments offer better risk-reward characteristics.
Perhaps most importantly, this demonstration shows that the continuous wheel strategy is truly continuous—it doesn't end with one completed cycle. Capital from closed positions immediately redeploys into new opportunities, maintaining consistent exposure to premium collection opportunities across changing market conditions. This continuous deployment is how systematic income strategies generate returns that compound over time rather than sitting idle waiting for specific market conditions.
For traders interested in implementing this strategy on their own positions, accurate cost basis tracking through tools like MyATMM is essential. The platform's ability to factor option premium into cost basis calculations, track performance across multiple transactions, and provide clear position summaries makes the difference between profitable systematic trading and confused position management where you're never quite sure if you're actually making money.
Options trading involves significant risk and is not suitable for all investors. The continuous wheel strategy requires accepting assignment of shares and potential capital losses if stocks decline significantly. Past performance does not guarantee future results. The 6.7% return shown in this example represents specific market conditions and may not be achievable in future positions.
This content is for educational purposes only and should not be considered financial advice. Always understand the risks involved and consider consulting with a qualified financial advisor before implementing options strategies. Cost basis tracking tools are designed to assist with record-keeping but do not replace professional tax advice.
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