When you're actively running the wheel strategy, put assignments are an expected and natural part of the process. Rather than viewing assignments as failures, successful option sellers understand that taking assignment is simply the transition from collecting put premium to collecting call premium on the same underlying stock.
This comprehensive guide walks through the exact process of handling put assignments on two positions: RUM and MVIS. You'll learn how to properly update your tracking system, recalculate cost basis with premium factored in, and prepare your positions for the next phase of income generation.
Key Concept: Put assignments aren't setbacks in the wheel strategy—they're transitions. You move from collecting put premium to collecting call premium while maintaining your income generation strategy throughout the entire process.
When you sell a cash-secured put option, you're making a commitment to purchase 100 shares of stock at the strike price if the stock closes below that strike at expiration. Assignment occurs automatically when:
Let's examine the RUM position that was assigned. The cash-secured put had an $8.50 strike price, but the stock price fell to $7.78 by expiration. Since the stock closed below the strike price, assignment was automatic and unavoidable.
The MVIS position involved two put contracts at a $3.00 strike price. With the stock trading at $2.87 at expiration, both contracts were assigned, resulting in the acquisition of 200 total shares.
Critical Understanding: You purchased these shares at the strike price ($8.50 for RUM, $3.00 for MVIS), not at the current market price. The premium you collected when selling the puts effectively reduces your actual cost basis below these strike prices.
After receiving assignment notifications from your brokerage, access your position tracking system. In MyATMM, the Cost Basis page provides a centralized location for managing all your option positions and stock holdings.
The platform now features enhanced filtering capabilities, including an "Only Positions" filter that narrows your view to active holdings, removing stocks you've previously traded but no longer hold. This streamlined view makes managing current positions more efficient.
Find the specific put contract that was assigned. In the demonstration, the system clearly displays:
Click on the assigned put contract and select the "Assigned" result option. This triggers the system to:
Result: Assigned
Date: Current date (or actual assignment date)
Position Type: Stock
Shares: 200 (2 contracts × 100 shares)
Assignment Price: $3.00 per share
Once the assignment is recorded and the new stock position is created, delete the put contract from your active positions. The put no longer exists—it's been converted to stock ownership.
This step is crucial for maintaining accurate position tracking. Leaving the old put contract in place would create confusion and distort your cost basis calculations.
After creating the stock position record, save the entry. The system generates a "proposed record" that you'll need to confirm by clicking save again. This two-step process prevents accidental entries and ensures accurate record-keeping.
Move the newly created stock purchase transaction into your transaction history. This action finalizes the entry and updates all position summaries with the new data.
After recording both assignments, the position summary automatically updates to reflect your current holdings. This summary provides comprehensive information at a glance.
Following the assignment of 200 shares at $3.00 each, the MVIS position summary displays critical metrics:
The distinction between cost basis with and without premium is particularly important. Your actual purchase cost averages $3.48 per share, but when factoring in the $81.80 in total premium collected, your effective cost basis drops to $3.27 per share.
The RUM assignment of 100 shares at $8.50 adds to existing holdings, creating this updated position summary:
Important Distinction: Notice how the position summary separates "Cost Basis Without Premium" from "Cost Basis With Premium." This dual-view approach allows you to see both your actual capital deployed and your effective cost basis after premium income is factored in.
One significant improvement highlighted in this tracking process is the automatic calculation of share counts. Rather than manually entering the number of shares owned, the system now calculates this automatically based on all positions in the transaction history.
This automation eliminates potential errors and ensures your share count always matches your actual holdings across all transactions: stock purchases, put assignments, call assignments, and stock sales.
The tracking interface now separates different position types for clearer visibility:
This separation provides immediate clarity about what positions you currently hold versus what has already been closed or assigned.
The new filtering capability addresses a common challenge: managing a growing list of tickers that includes both current and past positions. By enabling the "Only Positions" filter, you focus exclusively on stocks where you currently have:
This filter removes completed positions from view, reducing clutter and improving focus on active trades that require management.
Each time you record a transaction—whether it's a put assignment, call sale, or stock purchase—the position summary automatically recalculates all key metrics in real-time. You immediately see updated values for:
Now that you own the stock, you've transitioned from the put-selling phase to the stock-ownership phase of the wheel strategy. This transition opens up your next income opportunity: selling covered calls.
With 200 shares of MVIS and 500 shares of RUM, you can now sell call options against these holdings to generate additional premium income while you wait for the stock prices to recover.
When choosing call strikes to sell, consider these factors:
Cost Basis Advantage: For MVIS, your cost basis with premium is $3.27 per share, even though you purchased at $3.00. This distinction matters when selecting call strikes—you could potentially sell calls above $3.27 while still being above your effective cost basis.
Both RUM and MVIS have experienced price declines, with the stocks consolidating at lower levels. The video specifically notes that RUM is "consolidating down at the eight dollar-ish range" and could move up at some point, though "stocks do their own thing."
This realistic perspective is crucial for wheel strategy traders. Rather than trying to predict when stocks will recover, the focus remains on continuous premium collection:
The tracking system maintains a complete transaction history, allowing you to review every action taken on each position. This historical record provides valuable insights into:
Regularly reviewing this history helps you refine your strike selection, expiration timing, and overall wheel strategy execution.
The most challenging aspect of running the wheel strategy is maintaining accurate cost basis across numerous transactions. Every put assignment, call assignment, stock sale, and option expiration affects your position's cost basis.
MyATMM automatically handles these calculations, providing instant visibility into your true cost basis with premium factored in. This automation eliminates spreadsheet errors and saves hours of manual calculation time.
When you're running wheel strategies on multiple tickers simultaneously, tracking becomes exponentially more complex. MyATMM centralizes all positions in one platform, allowing you to:
Having accurate, real-time cost basis information helps you make better decisions about your next trades. You can instantly see:
Free Account Benefit: Track up to 3 tickers completely free with MyATMM. This is perfect for traders just starting with the wheel strategy or those focusing on a small number of core positions. Test the platform and experience the tracking benefits before committing to paid tiers.
No. Put assignments are a normal and expected part of the wheel strategy. Rather than viewing them as failures, understand that they represent the transition from put premium collection to covered call premium collection. Many successful option sellers welcome assignments as opportunities to collect call premium on quality stocks purchased at reasonable prices.
Continue selling covered calls at strikes above your cost basis (with premium factored in) to collect additional income. Each call premium you collect further reduces your effective cost basis. Over time, these premiums can substantially offset paper losses and even generate net profits despite unfavorable stock price movement.
Your true cost basis includes both your stock purchase price and all premium collected. For tax purposes, you'll report the actual stock purchase price, but for trading decisions, you should focus on your effective cost basis that includes premium income. Quality tracking tools like MyATMM automatically calculate both figures.
Consider closing or adjusting a wheel position when:
Otherwise, the wheel strategy's power lies in patience and consistent premium collection over time.
Options trading involves significant risk and is not suitable for all investors. The wheel strategy, while often marketed as conservative, still exposes you to substantial risks including unlimited loss potential on stock ownership and opportunity cost on capped upside.
Put assignments mean you're purchasing stock that has declined in value, which can result in unrealized losses. There is no guarantee the stock will recover or that continued premium collection will offset losses.
This content is for educational purposes only and should not be considered financial advice. Past results do not guarantee future performance. Always conduct your own research and consider consulting with a qualified financial advisor before implementing any options trading strategy.
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