Covered Call Assignment: Wheel Strategy Complete Cycle on MRVL

Introduction: Completing the Wheel Strategy Cycle

The wheel strategy reaches a critical milestone when covered calls get assigned and shares are called away. This moment represents the completion of one full revolution—from selling cash-secured puts, accepting assignment to acquire shares, selling covered calls against those shares, and finally having the shares called away at the strike price. Understanding how to properly process these assignments and restart the cycle is essential for continuous income generation.

When covered calls are assigned, you're obligated to sell your shares at the predetermined strike price regardless of the current market price. While some traders view this as "missing out" when stocks rally above the strike, assignments actually represent successful execution of the strategy. You collected premium on the put, premium on the call, and now realize a stock gain equal to the difference between your cost basis and the call strike. The key is recognizing this as a profitable outcome and efficiently restarting the process.

This article walks through a complete assignment cycle on Marvell Technology (MRVL), demonstrating how to track expiring options, process assignments in MyATMM, calculate realized profits from the complete cycle, and establish new cash-secured puts to restart the wheel. The systematic approach ensures accurate records, clear profit visibility, and seamless continuation of income-generating activity.

Processing Expiring Options: Determining Outcomes

The first step in managing assignments is determining what actually happened at expiration. Options can expire in three ways: exercised against you (assignment), expire worthless (maximum profit), or be closed early (partial profit). Knowing which outcome occurred for each position determines the appropriate processing steps.

Checking Friday's Closing Price

For options expiring on Friday, check the stock's closing price on that expiration date. This single price point determines the fate of all options expiring that day:

• Above Call Strike: Covered calls will be assigned (shares called away)
• Below Put Strike: Cash-secured puts will be assigned (forced to buy shares)
• Between Strikes: Both calls and puts expire worthless (maximum profit scenario)

In the MRVL example, Friday's closing price was $40.68. The covered call had a $37 strike and the cash-secured put had a higher strike. At $40.68, the stock closed above the $37 call strike, guaranteeing assignment. The put, being below the stock price, expired worthless.

Identifying Assignment Notifications

Most brokerages send assignment notifications on the Saturday morning following Friday expiration. These notifications confirm which options were exercised and what stock transactions occurred. Look for:

• Confirmation that call options were exercised
• Stock sale transaction at the strike price (for covered calls)
• Stock purchase transaction at the strike price (for assigned puts)
• Removal of the options from your positions list

The notification provides the exact number of shares transacted and confirms the price. This documentation becomes the source data for logging transactions in your tracking platform.

Worthless Expiration Processing

For options that expire worthless, the processing is simpler. The option position disappears from your account with no stock transaction. You keep 100% of the premium collected when the option was sold. No further action is needed beyond removing that position from your tracking system.

In the example, the cash-secured put expired worthless. The $127 premium collected when that put was sold is now fully realized profit. The position can be deleted from the tracking system since there's no ongoing obligation.

Logging Assignments in MyATMM: Accurate Transaction Records

Proper assignment logging requires multiple interconnected transaction entries. An assigned covered call involves closing the option position and recording the stock sale. Each component must be logged separately but linked together to maintain accurate cost basis tracking and profit calculation.

Step 1: Clear the Worthless Put Position

Begin with the simpler transaction. For the cash-secured put that expired worthless, navigate to your MRVL positions in MyATMM and locate the put contract. Since it expired worthless, simply delete this position from your active trades. The premium collected when the put was initially sold remains in your transaction history as realized profit.

Step 2: Process the Call Assignment

The covered call assignment requires more detailed logging. MyATMM provides an assignment workflow that captures all necessary data:

1. Navigate to the covered call position in your MRVL cost basis page
2. Click the assignment button to initiate the assignment workflow
3. Enter the assignment details: strike price, number of shares called away
4. Confirm the option position is closed (buy to close price: $0 if assigned)
5. Record the stock sale at the strike price

For the MRVL position, the assignment details were:

Field	Value
Strike Price	$37.00
Shares Called Away	100
Stock Sale Proceeds	$3,700
Buy to Close Cost	$0 (assignment)
Option Premium Originally Collected	$127

Step 3: Clear the Stock Position

With the call assignment logged, the associated stock position must be cleared. The assignment workflow automatically generates the stock sale transaction, but you need to confirm it matches your brokerage records.

In MyATMM, this involves:

• Verifying the stock sale transaction shows $3,700 proceeds (100 shares × $37 strike)
• Confirming your share count decreases by 100
• Checking that your cash balance increases by $3,700
• Ensuring the covered call position is removed from active options

After processing the assignment, the position summary should reflect zero shares owned in MRVL and no active options positions. All premium collected—both from the initial put and the subsequent call—appears in your transaction history as realized income.

Step 4: Reconcile Account Balance

The final verification step ensures all transactions were logged correctly. Your MyATMM account balance should match your brokerage account balance exactly. Any discrepancy indicates a missing or incorrectly entered transaction.

The reconciliation confirms:

• Put premium ($127) was credited
• Call premium ($127) was credited
• Stock purchase when put was assigned was debited
• Stock sale from call assignment was credited ($3,700)
• All commissions and fees were accounted for

When the MyATMM balance and brokerage balance match, you've successfully logged all transactions from the complete wheel cycle.

Calculating Complete Cycle Profits

A full wheel strategy cycle generates profit from multiple sources. Understanding the total return requires adding option premium, stock gains, and accounting for any losses or opportunity costs. The calculation reveals whether the strategy executed profitably and informs decisions about continuing with the same underlying.

Profit Component 1: Option Premium

The wheel cycle began with a cash-secured put and concluded with a covered call. Both generated premium income:

Option Type	Premium Collected
Cash-Secured Put (entry)	$127
Covered Call (exit)	$127
Total Option Premium	$254

This $254 represents income collected regardless of stock price movement. It's realized profit the moment the options were sold and expires worthless or gets assigned.

Profit Component 2: Stock Appreciation

The second profit source comes from the stock itself. When the put was assigned, shares were purchased at the $37 strike. When the call was assigned, those shares were sold at $37. In this case, the entry and exit prices were identical, producing zero stock gain.

However, the $67 in collected premium effectively reduced the cost basis below $37, meaning the actual breakeven point was lower than the purchase price. The assignment at $37 therefore captured a small gain relative to the premium-adjusted cost basis.

Total Cycle Profit

The complete profit calculation for this MRVL wheel cycle:

Component	Amount
Put Premium	$127
Call Premium	$127
Stock Gain (37 purchase, 37 sale)	$0
Less: Commissions and Fees	-$67
Net Cycle Profit	$321

This $321 profit was generated with $3,700 of capital deployed (the strike price of the put that got assigned). The return on capital: 8.7% for the duration of the wheel cycle. If the cycle took 8 weeks to complete, this annualizes to approximately 56% return on deployed capital.

Opportunity Cost Consideration

At expiration, MRVL had rallied to $40.68, well above the $37 strike. Some traders view the $3.68 per share gap ($368 total) as "missed profits." However, this perspective misunderstands the strategy. The covered call capped upside in exchange for immediate premium income and downside protection. You can't collect call premium and simultaneously capture all upside—the premium is compensation for capping gains.

Additionally, had you not sold the covered call and simply held shares, you would have been exposed to full downside risk with no premium protection. The call premium provided a $1.27 buffer against stock declines. The trade-off is inherent to income strategies: certain income now in exchange for potential uncertain gains later.

Tax Implications

The $321 profit consists of different components with potentially different tax treatment:

• Option Premium: Generally treated as short-term capital gains
• Stock Gain: Classified as short-term or long-term based on holding period
• Qualified vs Non-Qualified: Assignment timing affects whether stock gains qualify for long-term treatment

Consult a tax professional for guidance on your specific situation, as option assignment tax treatment can be complex and depends on various factors including holding periods and assignment timing.

Restarting the Wheel: Setting Up New Cash-Secured Puts

With the assignment processed and profits realized, the capital is now free to redeploy. Restarting the wheel strategy involves selecting appropriate strikes for new cash-secured puts, analyzing available premium across different expirations, and placing orders to initiate the next cycle.

Analyzing Current Market Conditions

Before selecting strikes, assess MRVL's current price action and trend. In the example, MRVL had rallied strongly from $37 to $40.68—a significant upward move. The chart showed the stock making a sustained run higher on the yearly timeframe.

This upward momentum creates a decision point:

• Continue with MRVL: The successful profit cycle and current momentum suggest continuing with this underlying
• Switch Tickers: After completing a full wheel revolution, you could rotate to a different underlying

The decision to continue with MRVL made sense given the profitable execution and strong chart setup. Familiarity with the underlying's option chain and price behavior also provides an edge when making strike selections.

Examining the Option Chain

With MRVL trading at $40.68, the focus shifts to puts with strikes near the current price. The goal is finding strikes that offer attractive premium while representing acceptable entry prices should assignment occur.

Looking at the weekly expiration chain:

Strike	Days to Expiration	Premium (Mid)	Annualized Return
$40.50	4 days (Friday exp)	$0.83	~76%
$40.50	11 days (next Friday)	$1.29	~38%

The comparison reveals that weekly expirations continue to offer superior premium on an annualized basis compared to extending to the following week. The $0.83 for four days represents nearly double the annualized return of the eleven-day contract.

Strike Selection Strategy

The $40.50 strike sits close to the current $40.68 price, making it slightly out-of-the-money. This strike offers several advantages:

• Substantial Premium: $0.83 on a $40.50 strike is 2.05% return in 4 days
• Acceptable Entry Price: If assigned at $40.50, it represents a modest discount to the $40.68 current price
• High Probability of Expiring Worthless: The slight out-of-the-money positioning gives room for minor pullbacks
• Efficient Capital Use: At $4,050 buying power per contract, capital utilization is efficient

The $0.83 premium was split between bid ($0.83) and ask ($0.90). The midpoint of $0.86 became the target limit price for the order.

Placing the Order

The order setup involved specific parameters to optimize fill probability:

Placing the limit order three cents above the bid ($0.83 + $0.03 = $0.86) positions the order at the approximate midpoint. This pricing typically achieves fills within the first hour of trading as market makers adjust to opening volatility.

Managing the New Position

Once the order fills, the new cash-secured put gets logged in MyATMM with the fill price, commission, and net credit. This documentation starts the tracking for the new wheel cycle. From this point forward, the position gets managed based on several potential outcomes:

• Expires Worthless: Keep the $85+ premium and sell another put
• Gets Assigned: Acquire 100 shares at $40.50, reducing cost basis by the $0.86 premium to $39.64 effective entry
• Opportunity to Roll: If MRVL drops and the put goes in-the-money, consider rolling to extend duration and collect additional premium

The systematic approach ensures continuous income generation. Whether the put expires worthless or gets assigned, capital stays deployed in income-producing positions week after week.

Position Sizing and Capital Allocation

The transition from assigned covered calls back to cash-secured puts involves a capital allocation decision. The example position moved from holding 100 shares plus options to selling a single cash-secured put. This conservative sizing represents one approach, but the strategy can scale based on capital availability and risk tolerance.

Single Contract vs Multiple Contracts

When restarting after assignment, you have several sizing options:

• Match Previous Size: Since 100 shares were called away, sell one put to potentially reacquire 100 shares
• Scale Up: Sell 2-3 puts to build a larger position faster if conviction is strong
• Scale Down: Take profits and rotate capital to different underlyings, using only a portion to restart MRVL

The single-contract approach provides measured re-entry. If the put gets assigned, you're back to 100 shares and can immediately sell one covered call. This creates a repeatable rhythm: one put, potential assignment to 100 shares, one covered call, potential assignment out, repeat.

Building Larger Positions Over Time

Rather than deploying large capital upfront, the wheel strategy naturally builds positions through repeated assignments. Each cycle adds potential share accumulation. Over multiple cycles, this creates a growing position:

Cycle	Action	Cumulative Shares
Cycle 1	Put assigned: +100 shares	100
Cycle 1	Call assigned: -100 shares	0
Cycle 2	2 puts assigned: +200 shares	200
Cycle 2	1 call assigned: -100 shares	100
Cycle 3	1 put assigned: +100 shares	200

This gradual accumulation allows position size to grow organically based on assignment outcomes rather than through large lump-sum purchases. The strategy naturally averages into positions at various price points.

Capital Redeployment After Full Cycles

When covered calls get assigned and you're back to 100% cash in that ticker, a redeployment decision arises. The $3,700 proceeds plus $321 profit provides roughly $4,000 available for reallocation. Options include:

• Deploy all capital back into MRVL puts (sell 1 contract at $40.50 = $4,050 buying power required, nearly full redeployment)
• Deploy half to MRVL, half to a second ticker for diversification
• Take the $321 profit out of the trading account and redeploy only the original capital
• Scale up by adding fresh capital to the profit, selling 2 contracts instead of 1

The decision depends on overall portfolio allocation, conviction in the underlying, and risk management preferences. The example demonstrated full redeployment back into MRVL, maintaining focus on a single ticker that had performed well.

Why Accurate Tracking Matters for Wheel Strategy

The wheel strategy involves numerous interconnected transactions: initial put sales, potential assignments creating stock positions, covered call sales, potential assignments closing stock positions, and continuous position restarts. Without systematic tracking, calculating true profitability becomes nearly impossible.

Transaction Complexity Compounds Quickly

A single wheel cycle on one ticker generates multiple transaction types:

• Sell to open put (premium credit)
• Put assignment (stock purchase debit)
• Sell to open call (premium credit)
• Call assignment (stock sale credit)
• Commissions and fees on each transaction

Running multiple concurrent cycles across different tickers creates dozens of transactions per month. Spreadsheets quickly become unwieldy with manual entry requirements and formula complexity. Missing a single transaction corrupts all downstream calculations.

Cost Basis Accuracy Enables Better Decisions

Knowing your true cost basis—both simple average and premium-adjusted—is critical for strike selection. If you don't accurately track all collected premiums, you might select call strikes that are actually below your true breakeven point, locking in losses instead of profits.

In the MRVL example, tracking showed $321 in total premium collected over the life of the position. This data informed the decision that assignment at $37 was profitable even though the purchase also occurred at $37. Without tracking, the cycle might appear to be a breakeven trade, missing the premium income component.

Account Reconciliation Catches Errors Immediately

MyATMM's account balance reconciliation compares your tracked balance against your actual brokerage balance. When these match exactly, you know every transaction has been logged correctly. When they don't match, you immediately know something was missed or entered incorrectly.

This real-time verification prevents small errors from compounding into large discrepancies. Catching a $127 premium entry error immediately is far easier than discovering months later that your cost basis calculations have been wrong for multiple cycles.

Historical Reporting Demonstrates Strategy Effectiveness

Systematic tracking creates permanent records of all option income over time. MyATMM reports total premium collected by ticker, by month, and by year. This historical data proves whether the wheel strategy is actually generating the expected returns or underperforming.

After running the wheel on MRVL for multiple cycles, the cumulative data shows total capital deployed, total premium collected, number of assignments, and overall return on capital. This evidence-based analysis is impossible without comprehensive transaction tracking.

Tax Reporting Simplified

At tax time, wheel strategy traders face complex reporting requirements: short-term gains from expired options, potential long-term gains from assigned stock, wash sale calculations, and commission deductions. Having a complete transaction log with dates, prices, and premiums simplifies the reporting process significantly.

MyATMM's transaction history provides a chronological record with all necessary data for tax forms or providing to accountants. Rather than reconstructing months of option trades from brokerage statements, everything is already organized and categorized.

Conclusion: Mastering Assignment and Continuous Execution

Covered call assignments represent successful wheel strategy execution, not missed opportunities. The $321 profit from the MRVL cycle came from systematic premium collection and disciplined strike selection. Processing the assignment correctly, logging all transactions accurately, and immediately restarting with new cash-secured puts creates continuous income generation that compounds over time.

The key to long-term success is viewing assignments as milestones in an ongoing process rather than endpoints. Each assignment frees capital to redeploy, creates an opportunity to reassess the underlying, and allows for position sizing adjustments. The systematic approach—track expirations, process assignments, calculate profits, restart positions—builds profitable habits that persist across market environments.

MRVL's rally from $37 to $40.68 might superficially appear to be "missed profits," but this perspective misunderstands income strategies. The covered call provided $127 in certain premium income in exchange for capping gains at $37. You cannot simultaneously collect call premium and retain full upside potential—premium is compensation for limiting gains. The trade-off is intentional and profitable when executed systematically.

Position sizing matters when restarting cycles. The conservative one-contract approach provides measured re-entry and manageable risk. Scaling up to multiple contracts can accelerate position building but requires sufficient capital to handle simultaneous assignments. Most traders benefit from starting small and gradually increasing size as profits accumulate and confidence builds.

MyATMM transforms complex wheel strategy execution into organized, trackable workflows. Assignment processing becomes a structured series of steps rather than a confusing jumble of stock sales and option closes. Cost basis calculations happen automatically, providing instant visibility into true breakeven points. Account reconciliation ensures perfect accuracy across all transactions.

The wheel strategy generates income through repetition and consistency, not through sporadic large wins. Each cycle might produce modest absolute profits—$321 in this example—but running multiple concurrent cycles across several tickers creates substantial aggregate income. Track every transaction, process every assignment correctly, and restart positions immediately to maintain continuous capital deployment.