Wheel Strategy Stock Filter

✅ Rule-by-rule breakdown

Rule	Threshold	Actual	Pass?
1. Universe ticker Trades outside universe are responsible for the largest historical losses in the framework.	On whitelist	TNA	PASS
2. Weekly CoC ≥ 1.2% Below floor = not worth the capital lock-up. Move on.	1.20%	2.21%	PASS
3. DTE 7 to 23 days Sweet spot for theta + manageability. Outside this range = stale or gamma risk.	7 ≤ DTE ≤ 23	9 days	PASS
4. Open Interest ≥ 100 Lower OI = wide bid-ask spreads. You give back gains just to close.	100	1240	PASS
5. Delta 0.30 to 0.50 Below 0.30 = thin premium. Above 0.50 = assignment risk too high.	0.30 ≤ Δ ≤ 0.50	0.40	PASS
6. Cushion ≥ 5% Less than 5% gap = no room for normal volatility.	5.00%	0.64%	FAIL
7. RSI < 70 (optional) Above 70 = overbought. Wall Street sells overbought. Above 80 = absolute no.	< 70	58	PASS

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 — 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 ≥ 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 ≥ 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 ≥ 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.

Understanding the Wheel Filter

This screener narrows the entire optionable universe down to tickers that meet the framework's whitelist criteria for cash-secured puts and covered calls. The goal isn't to find the highest-yielding ticker — it's to remove tickers with hidden binary risk before you ever look at their option chain.

The Framework Whitelist Criteria

Wheel strategy practitioners filter on the following before any chain analysis. Treat this like a sticker on the front of the trading screen:

IV Rank: 25 to 65. Below 25 the premium is too thin; above 65 you're being paid for a reason you may not understand.
Market cap: $50B or higher for single stocks. Mega-cap balance sheets absorb shocks small caps cannot.
Dividend safety: payout ratio under 60% for dividend names, or a clear policy of not paying one (most tech). Avoid "high yield" names where the dividend is the only reason holders own it.
No earnings inside the DTE window. Earnings are binary; the wheel is a theta strategy. These mix poorly.
No FDA decisions, court verdicts, or product launches inside the DTE window. Same logic.
No active political/regulatory risk (active antitrust suits, tariff exposure that's currently in the news cycle, sanctions exposure).
Average daily volume: 5M+ shares for stocks, 500k+ for ETFs. Liquidity is non-negotiable.
Option open interest: 100+ at the strikes you intend to trade.

The Approved Universe

In practice, the framework rotates among a short list:

Large-cap tech: AAPL, MSFT, GOOGL, NVDA, AMD, AMZN, META
Leveraged single-stock ETFs (when IV rank justifies it): AAPU (AAPL 2x), GGLL (GOOGL 2x), MSFU (MSFT 2x)
Broad leveraged ETFs: TNA (Russell 2000 3x) only when small-cap IV rank is elevated
Index ETFs as ballast: SPY, QQQ, IWM for low-IV environments

Worked Example

Consider screening on a Monday morning. NVDA trades at $140 with an IV rank of 58, market cap above $3T, no earnings for 35 days, and 20,000+ open interest on weekly options. It clears every filter — proceed to the CSP calculator.

Compare to a hypothetical biotech at $45 with IV rank of 92, $4B market cap, and an FDA decision in 18 days. The IV rank looks tempting because the premium is huge — but the framework rejects this immediately. The premium is high because of the binary event, and one adverse headline can move the stock 40% overnight. Wheel mechanics break down on gap risk of that magnitude.

Common Mistakes

Chasing IV rank above 65. Elevated IV is almost always priced in for a reason: earnings, lawsuits, macro stress, or short-squeeze dynamics.
Selling puts on tickers you'd never hold long-term. Assignment is part of the strategy. If you wouldn't own it for six months, don't sell the put.
Ignoring the dividend ex-date on covered calls. Early assignment risk spikes the day before ex-dividend for ITM calls.
Using leveraged ETFs in low-IV regimes. The decay drag on 2x and 3x products overwhelms premium when volatility compresses.
Skipping the earnings check. It's the single most common avoidable loss in the wheel.

Bottom Line

The whitelist exists to remove ambiguity from ticker selection. IV rank 25-65, market cap $50B+, no binary events inside the DTE window, sufficient liquidity. Everything else flows from there. A well-filtered universe of 8 to 12 tickers is more than enough to run the wheel indefinitely.

Educational only. Not investment, tax, or legal advice.

The Wheel Strategy Filter

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