- Industry
- The specific line of business the company is in, shown under the ticker. Use it to spot concentration. Multiple puts on stocks in the same industry implies you’re really only making one bet since those names tend to fall together. Stock selection comes first, but spreading your Wheels across sectors and industries is what keeps a poorly timed sector rotation from hitting every position at once.
- Grade
- My computed quality score for the company (0 to 100), blending valuation, growth, profitability, debt, cash conversion, and dividend quality with analyst revisions and forward guidance.
- Setups
- How many put contracts on this stock cleared the options screener based on delta, DTE, annual yield, open interest, ROC, and earnings timing. A stock only makes the board if (1) it is a high-quality stock, and (2) there are viable put setups on it. A company can pass the quality screener and still not show up in the tables above on a given week (which is a good cue to not to force the trade). A high setup count implies the screener found plenty of viable setups, not that the company is higher quality (i.e., that’s what Grade is for). Expand the row to see every contract that cleared.
- Ranking scale (Value, Growth, Dividend)
- The Value, Growth, and Dividend columns all utilize rankings. From worst to best, the possible rankings are Poor, Weak, Fair, Decent, Strong, Excellent, and Elite. The Dividend column can also read NA, which implies the company doesn’t pay a dividend at all.
- Poor
Weak
Fair
Decent
Strong
Excellent
Elite
NA
- Value
- Factor-based value ranking, from Poor to Elite. Weighted on five-year revenue and earnings growth, cash conversion, return on invested capital, and leverage.
- Growth
- Factor-based growth ranking, from Poor to Elite. Driven by five-year revenue and EPS growth, net margin, and return on capital, with thresholds tuned for growth-oriented companies. Revenue and earnings both have to be compounding for a company to rank well here, while the margin test screens out companies whose growth comes at the expense of profitability.
- Dividend
- Factor-based dividend ranking, from Poor to Elite. Scored across yield, payout ratio, and five-year dividend growth, plus the profitability and leverage needed to sustain them. For example, a high yield on a stretched balance sheet will rank poorly, since the dividend is the first thing to get cut when earnings become unstable. NA implies the company doesn’t pay a dividend (which does not negatively impact the overall grade).
- Last
- The stock’s most recent traded price at the time of this week’s analysis.
- PE upside
- How much the stock would rise if its P/E returned to its historical (or theoretical) median, applied to next year’s earnings. Calculated by taking the stock’s median P/E over the past several years, applying it to forward earnings estimates, and comparing that implied price to where the stock trades today. Note that the implied price could be one the stock has never actually traded at (which happens when earnings have run well ahead of the share price).
- Earnings in
- Days until the next earnings report. Holding a put through earnings introduces binary event risk (a single report can gap the stock straight through your strike), so my options screener automatically filters out any put that would expire after the next report. This is why a high-grade stock can drop off the 30-52 DTE board entirely when earnings are close: none of its 30-52 DTE puts expire in time, even though its weeklies may still clear.
- % off 52W high
- How far the stock is currently trading below its 52-week high. A value of 0% implies the stock closed at a fresh high, while 25% means the stock is 25% below its 52-week high. Some Wheel traders will only trade stocks that are in heavy uptrends (i.e., making fresh highs after small 5-15% pullbacks). Other traders prefer to buy quality companies at a discount, favoring companies that are 20-40% off their 52-week highs and prime for a comeback. Both strategies have their merits and neither is wrong, it’s just a personal trading preference.
- Revenue growth 5Y
- Average annual revenue growth over the last five years. We like to target 5% or more. Below that, the business could be standing still after inflation.
- EPS growth 5Y
- Average annual earnings-per-share growth over the last five years. We target 7% or more. Earnings growth is where shareholder value actually gets created. Revenue growth without corresponding earnings growth implies you’re just running a bigger business at the same margins.
- FCF / net income
- Free cash flow as a share of reported net income. We like to target 80% or more, implying the earnings are backed by real cash instead of accounting timing. A company can report strong net income while generating very little cash (due to depreciation, accruals, and timing), so it’s always worth looking at this ratio. Below 80%, start asking hard questions about earnings quality.
- ROIC
- Return on invested capital (i.e., what the business earns each year on every dollar of debt and equity put into it). We target 15% or more, well above the S&P 500’s long-run 10%. If a business can’t generate at least 15% on its invested capital, it isn’t compounding faster than the broad market, and you’d be better off owning the index.
- Profit margin
- Net income as a share of revenue, targeting 10% or more. Thinner margins usually mean brutal competition, commodity exposure, or an operation that can’t control its costs. All three are bad news for a stock you may end up owning if your put is assigned.
- Net debt / EBITDA
- Number of years of earnings it would take to pay off net debt. We target < 3.0. Negative implies the company holds more cash than debt, which is typically a good thing. Above 3.0 the balance sheet starts to look stretched, and above 5.0 you’re in stress territory.
- Debt / equity
- Total debt against shareholder equity, targeting 0.8 or less. Above 1.0, the company is financed more by lenders than by owners, which amplifies both the upside and the downside. For a Wheel trader, lower is typically better because a lightly levered company is less likely to be forced into dilution, asset sales, or a dividend cut if the macro turns.
- Forward PEG
- Forward P/E divided by expected growth. We like to see < 1.5, implying a reasonable price for the growth you’re getting. Above 2.0 you’re paying a premium that the growth has to deliver on for the trade to make sense (not disqualifying, just expensive relative to value).
- Rev Next YR
- Consensus revenue growth expected next fiscal year. We like to target 7% or more, which highlights companies that are accelerating. This measure is the forward-looking counterpart to the five-year history. The 5Y columns tell you what the company has historically compounded at, while this one tells you whether analysts expect that to continue.
- Relative performance (RP) - 1M/3M/12M
- How the stock has performed against the rest of the market over the past 1, 3, and 12 months. For each window, every stock’s return is measured against SPY, then the entire market is ranked from 1 to 100. A 90 implies the stock outperformed 90% of the market over that window. Readings of 80 or above are highlighted green (a market leader), and 30 or below red (a laggard). Wheel traders like to read these three numbers together and look for alignment. Green across all three implies a stock that has led the market for a year and is still leading it today. A strong 12-month reading next to a weak 1-month reading implies a long-term leader that’s pulling back, which can be a healthy entry on a quality name, or the first sign the trend is breaking (so check the rest of the row before you sell the put).
- Bollinger Percent B (%b)
- Where a stock sits between its Bollinger Bands. A value of 0 indicates the stock closed right on its lower band, 0.5 on its 20-day moving average, and 1 on its upper band. This value can drop below 0 (or rise above 1) when the stock closes outside the bands. On a quality name that’s trending upwards, a low reading is a signal many weekly option sellers look for, since the lower band marks the bottom edge of the stock’s normal trading range, and may indicate a reversal is upcoming. Readings of 0.2 or below are highlighted green (the stock is in the bottom fifth of its range), and 0.8 or above red (the top fifth).
- RSI
- Relative strength technical indicator (0-100). On a quality, trending name, a low reading typically implies the stock is oversold and is potentially due for a bounce (which is the entry most weekly put sellers desire). Readings of 30 or below are highlighted green (oversold), and 70 or above red (overbought).
- Stoch RSI
- Stochastic RSI technical indicator (0-100), a more sensitive version of RSI. Readings of 20 or below are highlighted green (oversold), and 80 or above red (overbought). Read it with RSI to help time your entry (because Stoch RSI is more sensitive, it can signal earlier and whipsaw more, so use RSI for confirmation).
- Implied volatility (IV)
- Implied volatility (annualized) the options market is pricing into each contract. IV is the single biggest driver of how much premium a put pays. The highest IVs on the board usually belong to the names that have been falling (the market is pricing more of the same), so rich premium on its own is not an edge. For that, you need historical volatility (HV).
- Historical volatility (HV) - 1M/3M/12M
- Historical volatility measures the volatility the stock has actually seen over the past 1, 3, and 12 months (IV is forward-looking, HV is backward-looking). Hover over any IV value to see a ticker’s HV values. Next, compare IV to the HV window closest to the contract’s DTE. IV above HV means the put is priced for more movement than the stock has shown (which is the premium seller’s edge). Then compare the windows to each other: a 1M well above the 12M is a choppier stretch than usual. For example, conservative Wheel traders will typically only sell a put when (1) IV sits above the matching HV window, (2) the windows agree the stock is behaving normally, and (3) the strike sits beyond the move IV implies. If all three do not hold, Wheel traders may choose to go further out, size smaller, or skip the trade altogether.
