The wheel gets harder to track the better it works

In late May I skipped a wheel cycle on SOFI. Not because I looked at the trade and passed on it. I ran out of week. The hour it would have taken to bring the record up to date and settle on a strike never arrived, because a Sunday already has plenty with a claim on it. So I did not open anything, and that week earned nothing.

SOFI was bouncing between about $16 and $18 that spring and I was running it weekly. AMD I ran monthly, puts only, and I was never assigned once. Same strategy, same account, same person. One of them took a minute to record. The other was quietly eating my Sundays.

I assumed the difference was frequency. Weekly is four times the work of monthly, and that was part of it. The bigger part was that AMD never did the thing the wheel is supposed to do.

Assignment is the thing you wanted

If you have not run the wheel before, the short version is that you sell a cash-secured put on a stock you would be happy to own. If it expires worthless you keep the premium and sell another one. If it gets assigned you buy the shares, and then you sell covered calls against them until they get called away, and then you start over.

Assignment is not the failure case. It is the strategy working. You picked a stock you wanted to own and the market handed it to you at a price you chose.

It is also the exact moment your tracking changes shape.

AMD, for me, never got there. Sell a put, wait a month, it expires, sell another one. Twelve decisions a year and every one of them the same kind of decision. In a spreadsheet that is one row per trade, one column for premium, one for the strike, one for the date. You could keep that on paper.

SOFI cycled constantly, because a stock oscillating in a two dollar band is a stock that keeps crossing your strike. The put would get assigned. Now I owned a hundred shares, and the row that used to represent a trade represented a position instead. Then I would sell a weekly call against it. Then another. Then the shares would get called away and the whole thing would close and I would start again with a put.

Fifty two decisions a year instead of twelve, and each one changing what I needed to write down. Those do not add together. They multiply.

The spreadsheet worked

It was Google Sheets, and I want to be clear that it worked. The story people expect here is that I was flying blind and my numbers were wrong. They were not. I knew what the wheel was making.

What I had not accounted for was that the sheet was never finished. Every few weeks I wanted to know something it did not tell me, or I found something I had forgotten to capture, and both of those meant going back into the formulas.

Changing a formula in a sheet full of history is not a five minute job, because the history was computed by the old formula. Either I went back and fixed every earlier cycle by hand, or I accepted that my January rows and my May rows were no longer measuring the same thing. I did some of both, which is worse than either.

The thing I learned too late

Here is the best example, and it is the one that finally convinced me.

Sell a put, get assigned, and the premium you collected reduces your cost basis in the shares. Sell a covered call against those shares and let it expire worthless, and that premium does not touch your basis at all. It is a short-term capital gain in the year it expired.

Those are not my opinions about how to think about it. They are two sentences from the same paragraph of IRS Publication 550, under the heading “Writers of puts and calls”:

If your obligation expires, the amount you received for writing the call or put is short-term capital gain. If a put you write is exercised and you buy the underlying stock, decrease your basis in the stock by the amount you received for the put.

Economically, of course that call premium lowered what the shares cost me. The money came in because I was holding them. But the basis does not move.

So after the first covered call, you have two different true answers to “what did these shares cost me,” and they drift further apart every single week you write another one. Rounded to the shape of it, on a $17 stock:

Event	Tax basis	Break-even	Realized short-term gain
Put assigned at $17, $0.35 premium	$16.65	$16.65	none
Weekly call expires, $0.20	$16.65	$16.45	$20
Weekly call expires, $0.25	$16.65	$16.20	$45
Weekly call expires, $0.18	$16.65	$16.02	$63

Three weeks in, those two numbers are 63 cents apart. On a seventeen dollar stock that is nearly four percent of the position, which is not a rounding error, it is most of what the trade was ever going to make.

Both numbers are correct. They answer different questions. If you want to know where you stop losing money on this position, it is $16.02. If you want to know what you will owe when you sell, it is $16.65, plus tax on $63 of gains you have already booked whether you feel like you have or not.

Now notice when I could possibly have learned this. Not when I built the sheet, because on day one I was selling puts and did not own anything to have a basis in. Only after I had been assigned and had written a few calls, which on a weekly cadence is about three weeks in. By then I had history that did not have the column.

That is the pattern. Every genuinely useful thing I learned about my own strategy arrived after I had already recorded weeks of data without it.

What it actually cost

Not accuracy. I keep saying that because it is the part I got right and it is the part that made the problem invisible for so long.

It cost cycles. Catching the sheet up and deciding on the next trade were the same hour, and that hour competed with everything else a Sunday already holds. My kids are young. Some weeks the hour simply did not exist, and a week where it did not exist was a week I did not open anything.

A wheel you are too busy to roll does not earn anything that week. That is the whole thing. The bookkeeping the strategy demands scales with how well the strategy is working, and the cost of falling behind is paid in the returns you were tracking in the first place.

Some time in late May or early June I decided that was stupid, and started building the thing I actually wanted.

If you run the wheel and you recognise any of this, the wheel tracker is the part of Telemetry I built first and use most. There is also an options wheel calculator if you would rather just see the maths on a position before you commit to tracking anything.