Frequently Asked Questions

It comes down to position sizing. ReTrader builds each ticker in tranches — puts staggered across strikes and expirations — and two tranches is the minimum, each at least one contract (100 shares). SPY is the priciest name in the default basket, so it sets the floor: at roughly $600 a share, one SPY cash-secured put controls 100 × $600 = $60,000 of notional, so two tranches need about $120,000 of SPY exposure. At the conservative 1.0× notional target and SPY's default 30% weight, a $500,000 account gives SPY a $150,000 slice — about 2.5 contracts, enough for two tranches with room to spare. Drop toward ~$400,000 and that slice barely covers two contracts; below it, SPY can't be built with two tranches at the default allocation. $500,000 is simply the smallest account that can run the full default basket with proper tranche diversification.

The target percentage of the total portfolio notional budget assigned to a specific ETF. For example, in the default 6-ticker portfolio, SPY has a 30% allocation, meaning 30% of the portfolio notional budget is dedicated to SPY positions.

When a CSP buyer exercises their option, forcing you to buy the underlying ETF at the strike price. Assignment is expected and planned for in this framework — it triggers the transition from Leg 1 (CSP) to Leg 2 (CC).

The strike price at which you were forced to buy shares when a CSP was assigned. This becomes the reference point for cost basis and CC strike selection.

An option whose strike price is approximately equal to the current price of the underlying ETF.

The bid is the highest price a buyer is willing to pay; the ask is the lowest price a seller is willing to accept. The mid is the midpoint between them. This framework requires limit orders placed at the mid.

The SPDR Bloomberg 1–3 Month T-Bill ETF (ticker: BIL). Used as the primary liquid sleeve in this framework because it trades like any ETF (continuous market hours liquidity, tight spreads, easy to size) and provides funding for assignments.

An order to close an existing short option position by buying it back. The GTC buy-to-close at 75% profit is the default exit mechanism for CSPs in this framework.

When a CC buyer exercises their option, forcing you to sell your assigned shares at the CC's strike price. This resolves Leg 2 of the wheel and restarts Leg 1 with a new CSP.

A short put option where the seller has enough cash (or in this framework, the borrowing capacity under PM) to buy the underlying ETF at the strike if assigned. Selling CSPs collects premium income.

A short call option sold against shares you already own. In this framework, CCs are sold against assigned ETF shares as the exit mechanism for Leg 2.

A market condition in which futures contracts trade at a premium to spot prices, causing futures-based ETFs (like USO) to lose value over time as they roll expiring contracts into more expensive new ones. This is the structural drag that makes USO a poor long-term holding.

The effective price per share at which you acquired assigned shares, after accounting for CSP and CC premium received and any dividends collected. Net cost basis = Assignment strike − all CSP and CC premium received − dividends received to date.

A measure of an option's price sensitivity to a $1 change in the underlying ETF price. A 0.30-delta put has roughly a 30% probability of finishing in-the-money at expiration.

Cash payments distributed by ETFs to shareholders, typically quarterly. In this framework, dividends received on assigned shares reduce net cost basis and contribute to total return on the position. Dividend yields vary by ticker — XLE and TLT pay meaningful yields (~3% range); SPY and IWM pay smaller yields; GLD and SLV pay none.

The number of days remaining until an option expires.

The date on which an option contract expires. After expiration, the option is either exercised, assigned, or expires worthless.

An order type that remains active until either filled or manually canceled. The framework uses GTC buy-to-close orders on every CSP at 75% of premium received.

An exchange-traded fund that tracks a broad market index (like SPY for the S&P 500). The framework uses only liquid index ETFs to ensure tight options spreads and reliable executions.

An option with intrinsic value: a put with strike above current ETF price, or a call with strike below current ETF price.

The percentage of trading days over the past 52 weeks where implied volatility was lower than today. The primary IV metric used in this framework. Resistant to one-time spike distortions (unlike IVR).

ReTrader sources IVP from ORATS, an industry-respected options-data provider used by hedge funds and professional traders. ORATS computes IVP as the percentile of today's 30-day constant-maturity implied volatility against the trailing one-year of its own iv30 history — the same definition Schwab, ThinkOrSwim, and V12 itself use. For most tickers (bonds, commodities, international equity), ReTrader's IVP matches what you see in your broker within a few points. For US equity index ETFs — SPY, IWM, and QQQ specifically — Schwab's proprietary IV calculation can produce a percentile 10–25 points lower than ORATS's because the two vendors compute the underlying IV30 series slightly differently. Neither is wrong; they're measuring slightly different statistics. When you fill out the trade modeler, the IVP field is yours to type — paste your broker's number if you trust it, and the band classification will respect whatever you enter.

Live spot prices and option chains (the auto-fill on the CSP, CC, and Long modelers) come from marketdata.app. IVP, IV30, and dividend data come from ORATS. We use the right vendor for each job — marketdata.app is fast and intraday-fresh, ORATS provides the cleaner historical analytics. Your trade math runs on whichever spot, strike, premium, and IVP you've entered, regardless of source — you always have final say.

Where today's IV sits between the 52-week high and low. Less reliable than IVP because a single spike event can distort it for months. The framework does not use IVR.

Yes — it depends a lot on your account size, and ReTrader auto-recommends a default when you first enter your Net Liq. V12 §3.4 originally specified 5 tranches, but in practice that only makes sense once your per-ticker × per-tranche budget can support at least one full contract on the highest-priced ETF in your basket (SPY at ~$600 = $60k per contract). Below that floor, the engine recommends sub-contract budgets that round to zero — dead granularity. The brackets we recommend: under $1M Net Liq → 2 tranches, $1M–$2M → 3 tranches, $2M+ → 4 tranches. We cap at 4 because GTC buy-to-close orders fire on ~97% of CSPs in 2–3 weeks (well before expiration), so the number of simultaneously open tranches at steady state is bounded by your GTC cycle, not your target. More than 4 doesn't translate to more open positions — it just shrinks each new trade for no marginal time-diversification benefit. You're free to override the recommendation in Settings → Tunables; the hint shows the per-trade dollar size your current setting implies so you can see the trade-off.

Tempting, and you're right that premium per contract is materially better at high IVP — that's the whole reason the wheel strategy exists, to harvest the vol-risk premium the market is pricing rich. But the framework already leans into high-IVP regimes — just not through contract count. At EXTREME IVP (80+) ReTrader targets 0.10–0.15 delta on 21–28 DTE contracts instead of BASELINE's 0.25–0.30 delta on 45–60 DTE. You're selling cheaper insurance at a similar probability of payout, and cycling through the rich-vol regime faster — both of which compound your per-dollar return without expanding your dollar exposure. Contract count stays flat for one big reason: high IVP is correlated with shock conditions. The same volatility that's pricing options rich is often the prelude to a correlated decline that would assign you on multiple tickers at once. Sizing up contracts in those regimes magnifies tail risk asymmetrically — the small percentage of trades that lose hurt much more if you scaled them up. If you genuinely want more exposure to the strategy, raise your overall notional target (1.0× → 1.25× or 1.5×) so the framework's stress monitor accounts for the larger forced-liquidation math. Don't multiply contracts opportunistically when conditions look good; that's the move that looks brilliant for a while and then costs you when the regime turns.

A tax form (Schedule K-1) issued by Limited Partnerships (such as USO) to report each partner's share of income. K-1s are typically delayed and add complexity to tax filing — this is a key reason USO is treated as an advanced substitution rather than a default holding.

A tax form issued by brokers and standard ETFs to report income. Most ETFs in the default portfolio (SPY, IWM, TLT, GLD, XLE, SLV) issue 1099s, which are simpler than K-1s.

The two phases of the wheel cycle. Leg 1 is selling CSPs to collect premium. Leg 2 is selling CCs against assigned shares until called away.

An order to buy or sell at a specified price or better. The framework requires limit orders at mid for all options trades — never market orders.

The midpoint between the bid and ask prices. All limit orders in this framework are placed at the mid.

The total value of your account if all positions were closed at current prices. The reference value used for all notional and allocation calculations.

The total dollar value of ETF shares you would be obligated to buy if every open CSP were assigned simultaneously. The most important sizing metric in the framework. Calculated as: sum of (strike × 100 × contracts) across all open CSPs, plus market value of assigned shares (using max of market price and assignment strike for assigned legs).

Total notional exposure divided by Net Liq. The framework default target is 1.25×.

The number of outstanding option contracts at a given strike and expiration. Higher OI generally indicates better liquidity (tighter spreads, easier fills, easier exits). In the current version of the framework, OI is a user-facing best practice for trade selection but is not enforced by the engine.

An option with no intrinsic value: a put with strike below current ETF price, or a call with strike above current ETF price.

A risk-based margin system used by approved brokerage accounts that calculates margin requirements based on portfolio risk rather than fixed percentages of position value. Required to run this framework.

No — use a dedicated Portfolio Margin account. Three reasons: (1) Portfolio Margin is risk-based and stress-tests the entire account, so long-only buy-and-hold positions consume CSP capacity and change the stress profile of the wheel; (2) the strategy's foundation is a 'T-bill portfolio with options written on top' — a mixed account doesn't have that base, so return expectations no longer apply; (3) ReTrader's analytics assume Net Liq movements come from the wheel plus T-bill yield plus dividends, so a mixed account turns every dashboard number into noise. Open a separate Portfolio Margin account at your broker; most allow multiple accounts under one login.

Open contracts at one strike, one DTE, on one ticker, opened together in a single trade. For example, '3 SPY $685 puts expiring June 21' is one position. The 3-cycle cap (V12 §3.6) limits simultaneous positions per ticker to three.

The income received from selling an option. The wheel's primary return source comes from collecting premium on CSPs and CCs.

The annualized return on the total notional exposure of options positions, expressed as a percentage.

Two basic option types. A put gives the buyer the right to sell at a strike price; a call gives the buyer the right to buy at a strike price. The framework sells puts (CSPs) and calls (CCs) — never buys them.

The standard Federal Reserve margin regulation that applies to non-PM brokerage accounts. Requires CSPs to be fully cash-secured, which makes this framework dramatically less efficient.

The interest rate available on safe government securities like T-bills. The framework's base yield component.

A market environment characterized by rapid declines in equity prices and flight to safer assets (Treasuries, gold). The diversification across SPY/IWM (equities), TLT (duration), and GLD/SLV (metals) in the framework is designed to provide some natural balance during risk-off events — but see V12 §2.5 on correlated stress.

The time required for a trade to officially settle in your account after execution. U.S. equity and ETF settlement is T+1 (one business day after the trade). For most brokers, intraday buying power is available against pending settlements in PM accounts.

The price at which the underlying ETF would be bought (for puts) or sold (for calls) if the option is exercised or assigned.

A scenario where an assigned ETF position is more than 8% below the original CSP strike, making it difficult to write a CC at that strike. V12 §4.4 governs this scenario.

Short-term U.S. government debt with maturities ranging from 4 weeks to 52 weeks. The yield engine of the framework.

A structure of six T-bill rungs with maturities in the 4–10 month range. As the front rung approaches maturity, it is reinvested at the back of the ladder, providing predictable monthly cash flow while keeping average duration short. Tenor intentionally avoids overlap with BIL's 1–3 month exposure.

The reduction in an option's value as expiration approaches, all else equal. CSPs benefit from theta decay as the seller — every day brings the option closer to either GTC fire or expiration. Together with IV compression, theta decay is a primary alpha source for the strategy.

The sum of all open positions plus assigned shares on one ticker. Used to evaluate whether a ticker is over- or under-allocated relative to its target.

The acceptable range of drift around a target value before action is required. The framework has two tolerance bands: portfolio-level notional drift band (default ±10%) and per-ETF allocation drift band (default ±20%).

A position opened during the initial book build phase. Sized to a fraction (1/2 for 2-tranche builds, 1/3 for 3-tranche) of full ticker target. Tranches are spaced 14 days apart and deploy a fraction of total target notional, providing IVP averaging, expiration laddering, and strike diversification across market levels.

An IRS rule that disallows a tax loss when the same or substantially identical security is repurchased within 30 days before or after the sale. In the wheel, this commonly occurs when called-away shares are sold at a loss and a new CSP on the same ticker is opened (or assigned) within the 30-day window. The disallowed loss is added to the cost basis of the new position — losses are deferred, not eliminated. Track wash sale adjustments via broker 1099-B.

One complete iteration of the strategy: sell CSP → either GTC fires (and you sell another CSP) or assignment → sell CC → either CC expires worthless (and you sell another CC) or shares called away → restart with a new CSP.

Framework-specific term for the T-bill ladder plus BIL sleeve, which together earn the risk-free rate on the large majority of your capital — everything not currently tied up in assigned ETF shares — and form the base return component of the strategy.

The default GTC buy-to-close target. A CSP is bought back when its market price reaches 25% of the original premium received, capturing 75% of the maximum possible profit. User-adjustable in Settings.