Money For the Rest of Us · Wednesday, September 23, 2026
David Stein shares an anecdote about a friend who initially praised the "wheel strategy" for options trading due to its high premium income. However, the friend later found that when stock prices fell below the put strike price, he was forced to sell calls on underwater assets, reducing his portfolio size and limiting his ability to redeploy capital. This experience illustrates the potential for significant losses despite initial income generation.
“Back in episode 323, I featured another friend that had gotten involved in options trading. He was using the wheel strategy, which is similar to the strategy that we are going over today where you're selling puts on single stocks or ETFs, you're collecting the premium income, it's very, very high income. But at some point, you're going to experience a loss.”
“And in 2023, are you still doing this? Because he was super excited about it. And he said, well, not as much because he had some positions that sold off, that they fell below the strike price for his puts. And then he had to sell calls on them.”
“And his portfolio was smaller. He didn't have as much money. And he said it wasn't as fun because he couldn't redeploy because he had these underwater assets.”