1.56% ROI in One Week: Assignment and Bilateral Options Trading

Introduction

When trading options, assignment is often viewed with apprehension—but for wheel strategy practitioners, it represents an opportunity rather than a setback. Getting assigned on a cash-secured put means you've acquired shares at a predetermined price with a reduced cost basis thanks to premium collection. More importantly, it unlocks the ability to implement bilateral trading: simultaneously selling covered calls against your newly acquired shares while continuing to sell cash-secured puts below your position.

In this comprehensive walkthrough, we'll examine a real-world example using Bath & Body Works (BBWI) where assignment on a cash-secured put enabled a 1.56% return in a single week. You'll see exactly how to track these transactions in MyATMM, calculate adjusted cost basis, and set up new bilateral positions that capitalize on the certainty principle: the stock price can only move in one direction, guaranteeing that at least one side expires worthless.

Understanding the Assignment Event

Before we dive into bilateral trading mechanics, let's review what happened during the assignment event that triggered this strategy.

The Previous Week's Position

Original Positions (March 4th)

  • Covered Call: $47 strike, collected $0.73 premium (limit was $0.55, filled at $0.73)
  • Cash-Secured Put: $46 strike, collected $0.72 premium (adjusted from $45 strike due to price movement)
  • Expiration: March 8th (both positions)
  • Stock Position: 100 shares already owned

By Friday, March 8th, BBWI closed at $44.76—below both the $47 covered call strike and the $46 cash-secured put strike. This outcome meant:

  • The covered call expired worthless – Full $0.73 premium retained, no assignment
  • The cash-secured put was assigned – Obligated to purchase 100 shares at $46.00

This assignment added 100 shares to the existing 100-share position, bringing the total to 200 shares and creating the foundation for bilateral trading.

Tracking the Assignment in MyATMM

Accurate cost basis tracking becomes critical after assignment events, especially when managing multiple positions across different entry points. Here's the exact workflow demonstrated in the tutorial.

Step 1: Log the Original Transactions

First, both the covered call and cash-secured put from March 4th needed to be logged into the permanent transaction history:

Transaction Details

  • Date: March 4th (position start date)
  • Action: Sell to Open (both positions)
  • Covered Call: 1 contract, $47 strike, $0.73 premium, March 8th expiration
  • Cash-Secured Put: 1 contract, $46 strike, $0.72 premium, March 8th expiration
  • Commissions: $0.65 per contract
  • Fees: $0.02 per contract

These transactions moved into the permanent history section, adding to the cumulative premium collection: $145.31 total premiums collected to date.

Step 2: Process the Assignment

When the $46 put was assigned on March 9th, the software workflow involves clicking "Do Assignment" on the cash-secured put position:

  • Action Type: Buy to Open (stock)
  • Quantity: 100 shares
  • Assignment Date: March 9th
  • Assignment Price: $46.00 per share ($4,600 total)
  • Commissions/Fees: None on assignment

The assignment automatically created a new stock position record for 100 shares at $46.00, bringing the total position to 200 shares.

Why Track Assignments Separately

MyATMM separates the assignment into the stock position section rather than keeping it linked to the put. This approach provides clarity: the put transaction is complete (premium collected, obligation fulfilled), and the new stock purchase becomes its own discrete entry. This separation makes it easier to track your true cost basis across multiple entry points and calculate returns accurately when eventually liquidating shares.

Step 3: Observe Cost Basis Adjustment

After processing the assignment, the cost basis summary updated automatically:

Updated Position Summary

  • Total Shares: 200
  • Total Cost Into Position: $9,300
  • Average Cost Basis (Stock Only): $46.50 per share
  • Cost Basis With Premium: $43.47 per share
  • Current Stock Price: $44.76
  • Unrealized Loss: -$348 (on stock value alone)
  • Total Premium Collected: $145.31

Notice the critical distinction: while the stock-only cost basis is $46.50, the cost basis with premium factored in is $43.47—well below the current market price of $44.76. This means despite being "underwater" on pure stock value, the overall position remains net positive by $129 if liquidated immediately.

The Power of Bilateral Trading

With 200 shares now owned, the continuous wheel strategy opens up the most powerful income-generation opportunity: playing both sides simultaneously.

Why Bilateral Trading Works

The strategy leverages a fundamental market truth: price can only move in one direction. When you sell covered calls above current price and cash-secured puts below current price, at least one side is guaranteed to expire worthless, letting you keep the full premium. Here's how it works:

  • If the stock moves up: The cash-secured put expires worthless (profit on premium), and the covered calls either expire worthless (if price stays below strike) or get assigned (profit on stock appreciation plus premium)
  • If the stock moves down: The covered calls expire worthless (profit on premium), and the cash-secured put either expires worthless (if price stays above strike) or gets assigned (adding more shares at reduced cost basis)
  • If the stock stays flat: Both sides can expire worthless (profit on both premiums)

The Bilateral Advantage

Unlike directional trading where you profit only if your prediction is correct, bilateral trading generates income regardless of direction. You're not betting on price movement—you're systematically collecting premium while managing your cost basis. This approach transforms volatility from a risk into an income opportunity.

Setting Up the New Bilateral Positions

With 200 shares in hand and assignment behind us, it's time to establish new positions for the upcoming week. Let's walk through the exact analysis and trade placement process.

Analyzing the Covered Call Side

The cost basis (stock only) is now $46.50 per share. To avoid taking a loss on shares, any covered call strike should be at or above $46.50. However, since there's no $46.50 strike available, the nearest strike above cost basis is $47.00.

Covered Call Options Analysis

  • 1 Week Out ($47 strike): $0.15 premium (only 0.3% return)
  • 2 Weeks Out ($47 strike): $0.45 premium (1% return over 12 days)
  • 3 Weeks Out ($47 strike): $0.60 premium (1.3% return over 19 days)

For demonstration and tracking purposes, the tutorial sticks with weekly options despite the low 0.3% return. In a live trading scenario, extending to 2 weeks for the 1% return would be more efficient. But to maintain consistent weekly video content and transaction tracking, the decision was made to sell the 1-week option.

Placing the Covered Call Trade

With 200 shares owned, 2 covered call contracts can be sold:

  • Strike: $47
  • Expiration: March 15th (1 week out)
  • Bid/Ask Spread: $0.15 / $0.35 (20-cent spread)
  • Limit Order: $0.25 (middle of spread, adding $0.10 to bid)
  • Quantity: 2 contracts
  • Total Potential Premium: $50 (2 contracts × $0.25 × 100 shares)

Analyzing the Cash-Secured Put Side

For the put side, the goal is to sell as close to at-the-money as possible while still collecting reasonable premium. Current price is $44.76, so the $44 strike provides a good balance.

Cash-Secured Put Analysis

  • Strike Selected: $44
  • Bid/Ask Spread: $0.50 / $0.60 (10-cent spread)
  • Limit Order: $0.55 (middle of spread, adding $0.05 to bid)
  • Quantity: 1 contract
  • Total Potential Premium: $55
  • Collateral Required: $4,400

The Complete Bilateral Setup

With both orders queued, here's the full position structure going into the week:

Bilateral Position Summary

  • Covered Calls: 2 contracts at $47 strike, $0.25 premium ($50 total)
  • Cash-Secured Put: 1 contract at $44 strike, $0.55 premium ($55 total)
  • Total Premium If Both Fill: $105 (before commissions)
  • Current Price: $44.76 (between both strikes)
  • Guaranteed Outcome: At least one side expires worthless

Calculating the 1.56% Weekly ROI

The title references a 1.56% return over the past week. Let's break down exactly where that number comes from.

Premium Collected (Previous Week)

  • Covered Call Premium: $0.73 per share ($73 total)
  • Cash-Secured Put Premium: $0.72 per share ($72 total)
  • Total Premium: $145
  • Commissions/Fees: -$1.34 (2 contracts × $0.67)
  • Net Premium: $143.66

Capital Deployed

The relevant capital for ROI calculation is the collateral required for the positions:

  • Covered Call Collateral: 100 shares at $47 cost basis = $4,700
  • Cash-Secured Put Collateral: $4,600 (strike price × 100)
  • Total Capital Deployed: $9,300

ROI Calculation

Weekly Return on Investment

ROI = (Net Premium ÷ Total Capital) × 100
ROI = ($143.66 ÷ $9,300) × 100
ROI = 1.54%

Note: The video references 1.56%, likely including slight rounding or additional factors. The core calculation demonstrates a weekly return in the 1.5% range, which annualizes to approximately 78% if sustained consistently—though this level of return is not guaranteed and will vary based on market conditions and strike selection.

Rolling Strategies vs. Taking Assignment

An important strategic note mentioned in the tutorial: in live trading with real capital, the trader often rolls positions rather than accepting assignment. Let's understand when and why.

When to Roll Instead of Accepting Assignment

Rolling means closing your current position and simultaneously opening a new position with a later expiration date (and often a different strike). You should consider rolling when:

  • You can still collect 1% or more premium within 30 days or less at the existing strike or nearby strikes
  • Extrinsic value remains substantial – If there's still time value left, rolling captures additional premium without assignment
  • You want to avoid capital inefficiency – Taking assignment ties up capital; rolling keeps cash available
  • The stock hasn't declined significantly – If premium remains attractive, there's no need to buy shares yet

When to Accept Assignment

Assignment makes sense when:

  • Premium has dried up – Can't collect at least 1% premium within 30 days
  • Price has declined substantially – Lower share prices mean better opportunities on the covered call side
  • You want to transition to bilateral trading – Owning shares unlocks covered call income alongside continued put selling
  • Cost basis becomes attractive – Dollar cost averaging has lowered your effective entry point enough that assignment is desirable

Rolling Strategy in Practice

The trader mentions rolling positions "as often as possible, for as long as possible" to maximize premium collection before accepting assignment. This approach can generate significantly more premium than simply accepting the first assignment opportunity. Only when premium becomes insufficient (below 1% return in 30 days) does taking assignment make financial sense.

Managing Cost Basis During Dollar Cost Averaging

One of the most powerful aspects of the continuous wheel strategy is the way it naturally implements dollar cost averaging while generating income. Each assignment adds shares at progressively lower prices (assuming a downward trend), pulling your average cost basis down.

The Downward Trend Scenario

If BBWI continues moving downward and additional cash-secured puts get assigned, each assignment:

  • Adds 100 shares at the strike price (which is below previous assignments)
  • Lowers the overall average cost basis
  • Increases the number of covered calls you can sell
  • Creates a larger cushion for premium collection on the call side

Cost Basis Projection Example

Current Situation:
200 shares, $46.50 average cost basis

If $44 Put Gets Assigned:
300 shares total
New cost basis = (200 × $46.50 + 100 × $44) ÷ 300 = $45.67

If Another $42 Put Gets Assigned:
400 shares total
New cost basis = (300 × $45.67 + 100 × $42) ÷ 400 = $44.75

As cost basis decreases, the strikes you can profitably sell covered calls at also decrease—making it easier to collect premium even in declining markets.

Tracking Proposed Cost Basis

MyATMM includes a "Cost Basis of Puts" calculation that shows what your cost basis would become if currently open cash-secured puts get assigned. This preemptive calculation helps you:

  • Visualize the impact of potential assignments before they happen
  • Make more informed decisions about which strikes to sell
  • Plan covered call strikes based on projected cost basis
  • Understand your maximum risk exposure

Preference Settings for Automated Commission Entry

One helpful feature demonstrated in the tutorial is the Preferences section in MyATMM, which allows you to set default commissions and fees.

Setting Up Commission Defaults

Instead of manually entering commissions for every transaction, you can configure:

  • Sell to Open Commission: $0.65 per contract
  • Sell to Open Fees: $0.02 per contract
  • Assignment Fees: Varies by broker (e.g., $5 on tastytrade)
  • Buy to Close Commission: Broker-specific

Once configured, these values automatically populate when you create new proposed records, eliminating manual data entry and reducing errors. This feature is especially valuable when managing multiple positions across different tickers and executing frequent weekly trades.

Conclusion: Assignment as Opportunity

For traders accustomed to directional strategies, option assignment can feel like failure. But for continuous wheel strategy practitioners, assignment represents progress—a transition from single-sided income (puts only) to bilateral income (puts and calls simultaneously).

This BBWI example demonstrates the complete lifecycle:

  1. Sell cash-secured put, collect premium
  2. Get assigned when price drops below strike
  3. Adjust cost basis to reflect new share acquisition
  4. Sell covered calls against owned shares
  5. Continue selling cash-secured puts below current price
  6. Collect premium from both sides regardless of price direction

With proper tracking through MyATMM, you maintain precise visibility into your true cost basis, cumulative premiums, and potential exposure. This clarity enables confident decision-making even as positions grow more complex.

The 1.56% weekly return achieved in this example, while not guaranteed in every market environment, illustrates the income potential of disciplined bilateral trading. By focusing on premium collection over price speculation, the continuous wheel strategy transforms volatility into consistent cash flow.

Risk Disclaimer

Options trading involves substantial risk and is not suitable for all investors. Selling cash-secured puts obligates you to purchase shares at the strike price if assigned, potentially resulting in losses if the stock declines significantly. Selling covered calls caps your upside potential if the stock appreciates beyond the strike price. Assignment risk, early assignment, and gaps in stock prices can impact results. This content is for educational purposes only and should not be considered financial advice. Past performance does not guarantee future results. Always consult with a qualified financial advisor before implementing any options trading strategy.

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Original Content by MyATMM Research Team | Published: March 10, 2024 | Educational Use Only