๐ฅ Your trade
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โ Rule-by-rule breakdown
| Rule | Actual | Pass? |
|---|---|---|
1. Universe ticker Trades outside universe are responsible for the largest historical losses in the framework. | TNA | PASS |
2. Weekly CoC โฅ 1.2% Below floor = not worth the capital lock-up. Move on. | 2.21% | PASS |
3. DTE 7 to 23 days Sweet spot for theta + manageability. Outside this range = stale or gamma risk. | 9 days | PASS |
4. Open Interest โฅ 100 Lower OI = wide bid-ask spreads. You give back gains just to close. | 1240 | PASS |
5. Delta 0.30 to 0.50 Below 0.30 = thin premium. Above 0.50 = assignment risk too high. | 0.40 | PASS |
6. Cushion โฅ 5% Less than 5% gap = no room for normal volatility. | 0.64% | FAIL |
7. RSI < 70 (optional) Above 70 = overbought. Wall Street sells overbought. Above 80 = absolute no. | 58 | PASS |
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Why each rule exists
The wheel strategy makes money slowly and predictably if you stay disciplined. Most traders blow up because they take "just one" trade that breaks their rules. This filter exists to make breaking rules visible โ so you stop doing it.
Universe whitelist
Trades on a tight list of ~12 vehicles (3x leveraged ETFs + Mag-6 2x ETFs + IREN). High implied volatility, fat premiums, and predictable mean-reversion patterns make these the sweet spot for selling cash-secured puts.
Weekly CoC โฅ 1.2%
Cash-on-cash per week is the only honest yield metric for CSPs. Anything below 1.2%/wk doesn't compensate you for the capital you're locking up. Target 1.2-1.5%, cap at ~1.7%.
DTE 7-23 days
Theta decay accelerates inside ~21 days. Going shorter = gamma whipsaw risk. Going longer = your capital is locked too long for the premium you collected.
OI โฅ 100
Open interest is the only liquidity signal that matters for options. Below 100 = wide bid-ask spreads, can't exit at fair price, market makers eat your profit.
Delta 0.30-0.50
Below 0.30 = premium is too thin to be worth it. Above 0.50 = your assignment probability is too high. Sweet spot is 0.30-0.45 for CSPs.
Cushion โฅ 5%
The gap between current spot and your strike. Less than 5% = one normal-volatility day puts you in trouble. 3x leveraged ETFs need MORE cushion, not less.
RSI < 70
Overbought means Wall Street will sell. Selling puts into overbought conditions is asking for assignment at the local high. Above 80 = absolute no.
Two-trade mindset
Before opening a CSP, pre-write the covered call you'll sell at cost basis if assigned. If that math doesn't pay, the strike is wrong. Trade #2 is part of trade #1.
The approved universe
3x Leveraged ETFs
2x Mag-6
Single stock
Universe is intentionally narrow. The framework's biggest historical losses came from "just this one" trades outside it. Stay in the lane.
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