What if you could generate $270 in option premium in just 10 minutes of trading time? That's exactly what bilateral options trading makes possible when you implement the continuous wheel strategy systematically. This approach allows you to play both sides of the market simultaneously, collecting premium whether the stock moves up, down, or sideways.
In this detailed walkthrough, we'll examine a real trading session on Marvell Technology Inc. (MRVL) where a trader sold one cash-secured put contract and four covered call contracts, generating $270 in total premium. More importantly, we'll explore why this bilateral approach is so powerful: at least one side is guaranteed to win since the stock can only move in one direction.
The continuous wheel strategy creates a systematic framework for generating weekly income while simultaneously lowering your cost basis through dollar cost averaging. When the stock drops, you're acquiring shares at lower prices, which reduces your overall cost basis and allows you to sell at-the-money options for maximum premium.
The covered call order involved selling four contracts against 400 shares of MRVL already owned. The original limit order was placed at $0.33 per share per contract, but the market wasn't cooperating. After waiting approximately 90 minutes past market open with no fill, the trader made a strategic adjustment.
Instead of letting the opportunity pass, the limit price was reduced to $0.21 per share to match where the market was actively trading that option. The order filled immediately at exactly $0.21, generating $84 in total premium (minus fees and commissions).
Built-in Capital Gain: If assigned at $45.00, there's an additional $0.25 per share gain ($25 per contract × 4 contracts = $100 total), which would be taxed as short-term capital gains since the shares haven't been held for over one year.
Reducing the limit price from $0.33 to $0.21 represents an important decision point in active options management. While the trader could have spent time analyzing whether the new premium still provided optimal value (such as the $0.10 per week benchmark used in previous analyses), the practical considerations were clear:
The cash-secured put order was placed simultaneously with the covered call and actually filled at a significantly better price than the limit order specified. This is a common occurrence in volatile markets where the stock moves in your favor after order placement.
Already In-the-Money: With the stock trading at $37.99 and the strike at $38.50, this position is $0.51 in-the-money. However, the $1.87 premium provides substantial cushion, meaning the effective breakeven is $36.63 ($38.50 strike - $1.87 premium).
The cash-secured put filled at $1.87 instead of the $1.21 limit because the stock price dropped after the order was placed. When volatility increases or the stock moves down, put premiums increase proportionally. This favorable fill added an extra $66 in premium beyond expectations, demonstrating why it's often strategic to use limit orders rather than market orders in options trading.
After executing both trades, the next critical step is accurately tracking these positions to understand your true cost basis and overall portfolio performance. This is where specialized tracking becomes essential for successful option sellers.
In the MyATMM platform, the trader navigated to the cost basis screen and filtered down to show only MRVL positions. Since both orders had executed, two new positions needed to be added to the tracking board:
The put position tracking followed a similar process:
MyATMM automatically generates proposed transaction records when you save positions in play. This feature streamlines the process of maintaining accurate transaction history:
After recording both premium transactions, the MyATMM dashboard revealed the complete portfolio picture for MRVL:
| Metric | Amount | Meaning |
|---|---|---|
| Overall Unrealized Loss | -$2,704 | Current market value vs. purchase cost |
| Overall Premium Collected | +$2,453 | Total premiums from all trades |
| Net Position | -$251 | If liquidated right now |
| March Premium Total | +$614 | Month-to-date income |
These metrics tell an important story. While the unrealized loss shows the stock is currently trading below the average purchase price, the premium collection is systematically reducing that gap. The $251 net loss assumes all options expire worthless and shares are liquidated immediately at current market prices, which isn't the plan.
One of the most important metrics for wheel strategy traders is the cost basis adjusted for premium collection:
This $38.62 adjusted cost basis represents the true position cost after accounting for all premium collected. The trader is less than a dollar per share away from breakeven, despite the stock trading $6.76 below the original purchase cost basis. This demonstrates the power of systematic premium collection over time.
The cost basis screen revealed how the position was built over time through strategic stock purchases:
| Purchase Date | Price per Share | Strategy |
|---|---|---|
| February | $46.50 | Initial position |
| February | $44.50 | First average down |
| February/March | $44.00 | Continued averaging |
| Pending (Put at $38.50) | $38.50 | Further cost basis reduction |
If the current cash-secured put at $38.50 gets assigned this Friday, it will significantly lower the overall cost basis. Using MyATMM's proposed cost basis feature (which factors in active puts), the cost basis would drop from $44.75 to approximately $43.50 after assignment.
The current MRVL position perfectly illustrates why dollar cost averaging through the wheel strategy is so powerful. Many traders bought shares in the $44-$46 range and are now watching the stock trade at $37.99, feeling stuck. But systematic option sellers are actively improving their position.
Compare two approaches to the same scenario:
When implementing the continuous wheel strategy, lower stock prices provide specific advantages:
If the trader continues acquiring shares through put assignments at lower prices around $38.50 and below, the overall cost basis will continue dropping. At some point, collecting enough premium will bring the cost basis with premium close to zero, meaning almost any stock price recovery results in profit.
The continuous wheel strategy is remarkably resilient to normal market volatility. Stocks go up, stocks go down, stocks trade sideways for extended periods. Through all these scenarios, you continue collecting premium and adjusting your cost basis. However, there is one risk that can't be managed through options mechanics: company bankruptcy or business failure.
If you're trading options on a company that goes out of business, the stock will eventually trend toward zero. At that point, no amount of premium collection can offset the total loss of capital. This is why stock selection is critical for wheel strategy traders.
When selecting stocks for the continuous wheel strategy, prioritize companies with:
For example, Marvell Technology (MRVL) is a semiconductor company with established products, diverse customers across multiple industries, and strong market fundamentals. While the stock price fluctuates with market conditions and sector performance, there's no immediate concern about the company going out of business.
One of the hardest aspects of the continuous wheel strategy is maintaining emotional discipline during extended downtrends. Markets can remain irrational longer than many traders can remain patient. Stocks can hover at depressed levels for months or even years.
However, if the company remains in business, the mathematics work in your favor:
As mentioned in the video, another position that dropped from the $40s to around $13 and stayed there for months still proved profitable. By continuing to sell puts at the $13 level and acquiring shares at those prices, the cost basis dropped from the $40s to the low $20s. The stock doesn't need to fully recover to the original purchase price for the position to become profitable.
While the general strategy is to continue the wheel indefinitely as long as the company is viable, there are circumstances where you might consider cutting losses:
The MRVL example demonstrates why purpose-built tracking tools are essential for option sellers implementing the continuous wheel strategy. Managing bilateral positions across multiple expiration dates while tracking cost basis adjustments would be extremely complex in spreadsheets.
MyATMM automatically calculates two critical cost basis metrics:
These calculations update instantly as you record new transactions, giving you accurate decision-making information.
When you have active cash-secured puts, MyATMM shows what your cost basis would become if those puts get assigned. This forward-looking view helps you evaluate whether taking assignment at specific strikes improves your overall position.
Instead of manually creating transaction history entries for every premium collection, the platform generates proposed records that you can review and move to your history with a single click. This saves time and prevents data entry errors.
The dashboard provides both ticker-specific and portfolio-wide views of performance:
When managing multiple tickers, the ability to filter down to specific positions becomes essential. MyATMM lets you quickly isolate individual tickers to track their transactions without distraction from other positions.
Option sellers who track positions in spreadsheets frequently encounter:
MyATMM solves these issues with purpose-built workflows designed specifically for covered call and cash-secured put traders implementing wheel strategies.
See exactly where you stand on every position with automatic cost basis calculations, premium tracking, and portfolio-wide performance metrics.
Create Your Free AccountTrack up to 3 tickers free forever. No credit card required.
Not all premium is created equal. Evaluate option opportunities using these guidelines:
For covered calls:
For cash-secured puts:
When volatility is low or markets are stagnant, premium shrinks. In these conditions:
The MRVL trading session demonstrates that generating significant option income doesn't require hours of analysis or complex strategies. With a systematic approach and proper tracking tools, you can:
The continuous wheel strategy works because it aligns with how markets actually behave. Stocks don't move in straight lines. They fluctuate, consolidate, trend, and reverse. By systematically selling options on both sides of current price, you capture premium from this natural volatility while building a position in quality companies at progressively better prices.
Most importantly, this approach removes emotion from trading decisions. You're not hoping for the stock to go up or down. You're implementing a mechanical process week after week, collecting premium regardless of direction, and tracking exactly where you stand with tools built for this specific use case.
Options trading involves risk and is not suitable for all investors. Assignment obligations, early assignment risk, and potential for total premium loss exist with every options trade. The continuous wheel strategy requires sufficient capital to cover cash-secured put assignments and involves holding stock positions that can decline in value. Past performance does not guarantee future results. The trades discussed here are for educational purposes only and should not be considered financial advice. Always consult with a qualified financial advisor before implementing any options trading strategy.