--- title: "Common Options Trading Mistakes to Avoid for The Wheel Strategy" description: "The 7 most common options Wheel Strategy mistakes that blow up accounts, from ignoring the Greeks to Wheeling stocks you don't want to own." author: "Adrian Rosebrock" date: 2026-05-21 lastmod: 2026-05-21 canonical: https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/ image: https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/header.jpg categories: ["Options Fundamentals"] --- > For the complete WheelMetrics content index, see [llms.txt](https://wheelmetrics.io/llms.txt). This is the Markdown edition of https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/. # Common Options Trading Mistakes to Avoid for The Wheel Strategy By Adrian Rosebrock · Last updated May 21, 2026 · 17 min read I spend a lot of time in options trading communities. Reddit threads, Discord servers, DMs from readers. And the same story plays out over and over: - Someone discovers the Wheel - Runs it for a few months - Makes some money - **...and then gets _absolutely crushed_ on a single trade** The details change. The ticker changes. The account size changes. But the mistakes? Those are always the same. **Wheel traders consistently blow up their accounts by making the same seven mistakes:** 1. Ignoring the Greeks 2. Selling into the wrong volatility 3. Trading illiquid options 4. Skipping fundamentals 5. Oversizing positions 6. Letting emotions drive decisions 7. Wheeling stocks they don't have any business owning Let's review each of them in detail. **Table of Contents** - [Why Ignoring the Greeks Leads to Bad Strike Selection](https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/#why-ignoring-the-greeks-leads-to-bad-strike-selection) - [What Happens When You Sell Premium Without Checking Volatility](https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/#what-happens-when-you-sell-premium-without-checking-volatility) - [How Illiquid Options Silently Destroy Your Returns](https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/#how-illiquid-options-silently-destroy-your-returns) - [Why Skipping Options Basics Sets You Up to Fail](https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/#why-skipping-options-basics-sets-you-up-to-fail) - [How Poor Position Sizing Turns One Bad Trade into a Blown Account](https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/#how-poor-position-sizing-turns-one-bad-trade-into-a-blown-account) - [Going All-In on a Single Position](https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/#going-all-in-on-a-single-position) - [No Capital Reserves](https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/#no-capital-reserves) - [Concentration Risk](https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/#concentration-risk) - [Why Emotional Trading Is the Fastest Way to Lose Money with the Wheel](https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/#why-emotional-trading-is-the-fastest-way-to-lose-money-with-the-wheel) - [Panic-Closing](https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/#panic-closing) - [FOMO Entries](https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/#fomo-entries) - [Revenge Trading](https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/#revenge-trading) - [Impatience](https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/#impatience) - [Why Wheeling Stocks You Don’t Want to Own Is the Biggest Mistake of All](https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/#why-wheeling-stocks-you-dont-want-to-own-is-the-biggest-mistake-of-all) - [Meme Stocks and the Premium Trap](https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/#meme-stocks-and-the-premium-trap) - [High-Flier Growth Stocks with Sky-High Valuations](https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/#high-flier-growth-stocks-with-sky-high-valuations) - [Stocks You Haven’t Researched](https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/#stocks-you-havent-researched) - [Don’t Prioritize Premium Over Conviction](https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/#dont-prioritize-premium-over-conviction) - [Where to Go After Fixing These Mistakes](https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/#where-to-go-after-fixing-these-mistakes) ## Why Ignoring the Greeks Leads to Bad Strike Selection There are two versions of this mistake: 1. The first is skipping the Greeks entirely and picking strikes by "feel" or round numbers 2. The second is looking at premium dollars without checking what delta and theta are actually telling you **Picking a strike because it pays $2.00 in premium tells you _nothing_ about the probability of assignment or how efficiently that premium decays in your favor.** $2.00 on a high-delta strike is a completely different trade than $2.00 on a low-delta strike. The dollar amount is identical. The risk profile is not. And here's the thing: High-theta strikes can _also_ be high-delta strikes. More daily decay sounds great, right? The problem is that higher theta comes packaged with a higher probability of getting assigned. You're collecting more per day, but you're also _far more likely_ to be assigned and end up owning the stock. **The Greeks aren't optional. They're the difference between a calculated risk and a blind bet.** _**Note:** Gamma makes this worse near expiration, by the way. It accelerates delta shifts, which is why short-DTE trades can whipsaw your position even if delta looked comfortable when you entered. This is one of many reasons I prefer selling 30-52 DTE rather than weeklies._ If you want the full framework on how delta drives strike selection, I wrote a complete guide on the topic, [Understanding Delta: The Most Important Greek for The Wheel Strategy](https://wheelmetrics.io/blog/understanding-delta-wheel-strategy/). And for how theta decay actually works in practice, see [Understanding Theta: Time Decay and The Wheel Strategy](https://wheelmetrics.io/blog/understanding-theta-time-decay-wheel-strategy/). ## What Happens When You Sell Premium Without Checking Volatility ![Storm clouds](https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/storm-clouds.jpg) This mistake has two sides: 1. Selling because [Implied Volatility](https://wheelmetrics.io/blog/what-is-implied-volatility/) "looks high" without checking whether [Historical Volatility](https://wheelmetrics.io/blog/what-is-historical-volatility/) is equally high 2. Selling when IV is actually _low_ without realizing premiums are paper-thin **High IV alone is not a green light.** If HV matches IV, the market is pricing in _real risk_, not handing out free money. You're being compensated for actual movement, not collecting mispriced premium. I see this constantly in trading communities. Someone posts a screenshot of a fat premium, everyone piles in, and _nobody_ checks whether the stock has been _actually moving_ that much. The "free money" crowd learns the hard way that the market doesn't misprice risk nearly as often as Reddit thinks. The flip side is just as dangerous. Selling when IV Rank is below 30 means you're near the bottom of the stock's own volatility range. Premiums are thin, there's no IV crush potential working in your favor, and you're wondering why the payoff is so small. Effectively, you're selling cheap insurance. That's exactly what it pays like. **Before every trade, run the volatility checklist and ask yourself these three questions:** 1. What's the IV Rank? 2. Is there a meaningful gap between IV and HV? 3. _Why_ is IV elevated? That last question is the most important. A stock with elevated IV because of routine earnings uncertainty is a different animal than one with elevated IV because of fraud allegations or a looming FDA decision. One is a tradeable event...the other is a landmine. **Remember, volatility is _context_, not a _signal._** Without context, high IV is just a number. With context, it's a decision framework. For the full volatility framework I use before every Wheel trade, see [IV and HV: Using Volatility to Select Better Wheel Trades](https://wheelmetrics.io/blog/implied-vs-historical-volatility/). ## How Illiquid Options Silently Destroy Your Returns ![Desert](https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/desert.jpg) This is the mistake you might not even realize is costing you money. Wide bid-ask spreads silently eat your premium. On illiquid options, the spread can swallow 20-50%+ of the premium you collected _before_ the stock moves a penny. Think about what that means in practice: Say the fair value of a put is $1.00, but the chain is somewhat illiquid with a wide spread, printing a bid of $0.60 and an ask of $1.40. - **On entry:** You sell to open and want to fill near the ask to maximize premium, but with so few participants on the chain, your order gets dragged down toward the bid and fills at $0.65 — $0.35 less than fair value, gone before the trade even starts - **On exit:** A week later the option's fair value drops to $0.50 and you want to close near the bid to minimize what you pay...but the spread is _still_ wide because the chain is _still_ illiquid. You get dragged up toward the ask and fill at $0.85 You collected $0.65 and paid $0.85 to close. **You _lost_ $0.20 on a trade that moved $0.50 in your favor.** The spread ate the entire profit and then some. _(And yes, this happens more often than you'd think.)_ **The hidden danger is even worse: when you _need_ to exit early, nobody is on the other side of the trade.** You're trapped in a position you can't close at a fair price. Both problems compound over time. The Wheel involves repeated trades. Even _modest_ spread costs add up across dozens of cycles per year. A 10% spread cost on each trade doesn't feel like much in isolation, but across 40-50 trades per year it's a meaningful drag on returns. The fix is straightforward: Check volume and open interest before every trade. If the options chain looks empty at your target strike and DTE, pick a different stock or expiration. **No amount of premium is worth trading an option that you can't exit at a fair price.** Illiquid options often show up on exactly the kind of stocks that look attractive from a premium standpoint (funny how that works, right?). The premium is fat _because_ nobody else wants to trade it. That should be a warning, not an invitation. For a deeper dive into how spreads impact your premium and what to look for, see [Understanding Bid-Ask Spreads and Options Liquidity](https://wheelmetrics.io/blog/bid-ask-spreads-options-liquidity/). ## Why Skipping Options Basics Sets You Up to Fail ![Sand castles](https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/sand-castles.jpg) There are two layers to this mistake. The first is skipping the basics entirely. Some traders start selling CSPs without a solid grasp of what [strike, expiration, and premium](https://wheelmetrics.io/blog/options-contracts-strike-expiration-premium/) mean, or [how to read an options chain](https://wheelmetrics.io/blog/how-to-read-options-chain/) to evaluate a trade. That's building on sand. If you don't understand the mechanics of what you're trading, every decision becomes a guess. And guesses don't compound into a system. If you need a refresher on the basics, start with [What Are Stock Options? A Beginner's Guide](https://wheelmetrics.io/blog/what-are-stock-options/). It covers everything from calls and puts to how options contracts actually work. The second layer is deeper, and it trips up even traders who _think_ they understand the Wheel. **Assignment is a _feature_ of the Wheel, not a _failure._** This is worth repeating because it's the _single most misunderstood aspect_ of the strategy. If you sell a put, you might buy 100 shares. That's the strategy working as designed. Traders who panic at assignment didn't understand the trade they entered. They treated the CSP as a premium-collection machine and forgot (or never learned) that the other side of the trade is stock ownership. **If getting assigned feels like a surprise, you skipped a step.** This is the most common story I hear: _"I sold a put for the premium and then the stock dropped and now I'm stuck with 100 shares I don't want."_ You were never "stuck". You entered a contract that said you'd buy shares at that price. The contract did exactly what it was supposed to do, you just didn't do your research ahead of time. For a full breakdown of what can go wrong with the Wheel (and how to handle it), see [Understanding Risks with The Wheel Strategy](https://wheelmetrics.io/blog/wheel-strategy-risks/). ## How Poor Position Sizing Turns One Bad Trade into a Blown Account ![Jenga blocks falling](https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/jenga-blocks.jpg) This is really three facets of the same underlying mistake: not respecting how much damage a _single bad trade_ (or a correlated cluster of trades) can do to your account. **Position sizing isn't about _maximizing_ returns. It's about _surviving_ long enough to compound returns.** Most new Wheel traders think about what they can gain. Experienced ones think about what they can afford to lose. Remember, it's hard to get rich if you keep going broke. ### Going All-In on a Single Position Deploying all your capital into one CSP means one bad trade wrecks the account. No diversification. No margin for error. No ability to take advantage of opportunities that show up while your capital is locked. I've seen traders with $25K accounts sell a single CSP on a $24 stock, tying up nearly their _entire_ account in one position. When the stock dropped 15%, there was nothing left to do but watch. **If a single assignment can take you out of the game, your position is too large.** ### No Capital Reserves Being fully deployed with no cash left means you can't: - Manage assignments when they happen - Take advantage of new setups that appear - Survive a drawdown without panic-selling Capital reserves aren't idle money. They're strategic flexibility. When everything is deployed and a stock drops through your strike, your only options are bad ones: - Sell at a loss to free up cash - Close other positions at suboptimal prices to free up capital - Hold and hope (never a strategy) **None of those are good decisions made from a position of strength. You're reacting, not managing.** ### Concentration Risk Running multiple Wheel positions in the same sector or on correlated stocks may feel like diversification, but it isn't. When the sector drops, they all blow up together. Three positions in energy stocks aren't three independent bets. _They're one bet with three tickers._ This is especially dangerous in a broad market selloff. Correlation spikes during panic, and suddenly your "diversified" portfolio of five different tech stocks is moving in lockstep. What looked like five independent positions turns out to be one big directional bet on the NASDAQ. **Poor position sizing amplifies every other risk on this list.** For more on how these risks compound, see [Understanding Risks with The Wheel Strategy](https://wheelmetrics.io/blog/wheel-strategy-risks/). ## Why Emotional Trading Is the Fastest Way to Lose Money with the Wheel ![Broken glass](https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/broken-glass.jpg) Every Wheel trader (and investor) feels these emotions. I feel them. You feel them. The trader with a $2M account feels them. Hell, even the greats like Warren Buffet and Charlie Munger feel them. **But remember, the mistake isn't feeling them. The mistake is acting on them instead of following your process.** ### Panic-Closing Consider watching your position go red. The stock keeps dropping, and every tick lower makes it harder to sit still. You close the position at a loss to stop the bleeding... and the stock reverses the next day. The original thesis was intact the whole time. You didn't have a strategy problem. You had a nerve problem. And now you've locked in a loss that the market would have erased for you if you'd just sat on your hands. ### FOMO Entries A stock is popping on Reddit. The premium looks incredible. You don't want to be the one who missed it. You skip your checklist and sell the put. _Two weeks later, the hype fades and you're holding shares of something you never actually researched._ Now you're stuck in a position with no exit plan and no conviction in the underlying. You don't even know if the company has earnings, let alone when they report. ### Revenge Trading You just closed a loser. The sting is fresh. You scan the chain for the fattest premium you can find and enter a new trade immediately, not because the setup is good, but because you need to "make it back." _(Hint: You won't make it back this way.)_ **Revenge trades are almost always oversized, under-researched, and entered at the worst possible time.** This is how one loss becomes two. And then three. Finally, you have a blown account staring back at you. ### Impatience It's been a week with no trades. Everything is either too expensive, too illiquid, or doesn't meet your criteria. You start get a little itchy, looking for some action. You start relaxing your rules just to get into _something._ - Maybe you widen your delta target - Maybe you pick a stock that doesn't quite meet your criteria - Maybe you sell a shorter DTE than you normally would **Sometimes (and mostly, _often_) the best trade is no trade.** Sitting in cash when nothing meets your criteria isn't laziness. It's discipline. The emotional patterns are different, but the root cause is always the same. No system. No rules. No predefined process for when things get uncomfortable. **The real fix is having rules in place _before_ the emotions show up.** - What delta do I target? - When do I take profits? - When do I cut losses? - What's my maximum position size? If you haven't answered these questions _in writing_ before the trade, you'll answer them in the moment. And in the moment, your emotions will do the answering. **Without a system, emotions fill the gap every time.** _(Therapist voice: You don't need to rationalize your feelings, but make sure you rationalize your trades, or the market will do fit for you.)_ ## Why Wheeling Stocks You Don't Want to Own Is the Biggest Mistake of All ![Mouse trap](https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/mouse-trap.jpg) **Stock selection is 90% of the Wheel.** You can... - Nail every Greek - Check every volatility metric - Trade the most liquid options on the chain - Size your positions perfectly - Manage your emotions like a Zen monk - ...and _still_ lose money if you're Wheeling the wrong stock. Remember: > _Premium is the bait. Assignment is the hook._ **Fat premium on a stock you'd never buy outright feels like free money... until you're holding 100 shares of something you don't believe in, watching it drop 30%.** At that point, the premium you collected is a rounding error against the loss. Before opening a position, ask yourself the following question: > _Would you buy this stock at this price and hold it for 6-12 months, even without the options premium?_ If the answer is _"No"_, don't sell the put. Full stop. No exceptions, no "but the premium is so fat." The premium is fat _because_ the risk is real. Now let's explore three categories of stocks that consistently trap Wheel traders. ### Meme Stocks and the Premium Trap Let's say you sell a CSP on the latest Reddit darling because the premium is 3x what you'd get on a blue chip. The stock runs on pure hype, no earnings, no revenue trajectory. When the momentum crowd moves on, the stock drops 60% in a week and you're assigned at a strike that's now deep underwater. **The premium is high on those names because the risk is high.** Implied volatility reflects the market's expectation of how much the stock can move, and meme stocks move _a lot._ When they move against you, you're stuck owning something with no fundamental floor: - No earnings growth to fall back on - No dividend to collect while you wait - No thesis for why the stock should ever recover The premium looks amazing right up until the stock craters. ### High-Flier Growth Stocks with Sky-High Valuations Now let's suppose a tech stock trading at 80x earnings has been on a tear for months. IV is elevated, the premium is juicy, and it feels like the stock can only go up. Then one earnings miss or downwards guidance, and the stock gaps down 25% overnight. Your "safe" CSP at a 20-delta strike is suddenly deep in the money. **Sky-high valuations mean massive downside when sentiment shifts.** The premium doesn't compensate for the risk of catching a falling knife. A stock that gaps down 25% overnight can erase _years_ of premium income in a single session. And unlike a value stock trading at 12x earnings, there's no valuation floor to catch you. ### Stocks You Haven't Researched Someone in your Discord group mentions a ticker you've never heard of. You pull up the chain, see decent premium, and sell the put without knowing what the company does or how it makes money. A week later, they announce a dilutive offering and the stock drops 20%. You had no way to see it coming because you never looked at the balance sheet, the earnings history, or the share structure. **If you can't explain what the company does, how it makes money, and why you'd want to own it, you have no business selling puts on it.** I don't mean to sound like an ass, but this is the bare minimum of due diligence. ### Don't Prioritize Premium Over Conviction The above three categories all share the same root cause — prioritizing premium over conviction. Could I have made this point more diplomatically? Maybe a bit more calmly and gently? Absolutely. But here's the thing: Every other mistake in this article is recoverable with better process and more discipline. **This one can blow up your account.** So, if I have to yell at you like your grandpappy did after you stole his parking spot at the family barbecue, that's just the way it is. _(Not like that **ever** happened to me or anything...)_ Do your homework on the stock first, then worry about the options. Get the stock selection right and the rest of the Wheel becomes dramatically easier. Get it wrong, and no amount of Greek optimization or volatility analysis will save you. _**Note:** For what it's worth, I publish [the best stocks for the Wheel Strategy](https://wheelmetrics.io/best-stocks-wheel-strategy/) every Monday, screened on fundamentals before a single options chain is opened. Give it a look._ ## Where to Go After Fixing These Mistakes Every experienced Wheel trader, _including myself_, has made at least a few of these. _Personally, I've made **all** these mistakes at one time or another._ **The here goal isn't perfection. It's awareness.** You don't need to eliminate every mistake before you start, you just need to _recognize them when they're happening_ so you can course-correct before they compound. Knowing what to watch for puts you ahead of most traders who learn these lessons the expensive way. I'm a big fan of the saying: > _Lessons aren't free, and the good ones are expensive._ But they don't have to be _so expensive_ that they blow up your entire account. That's the whole point of this article. _But I digress..._ If you want a [structured path through all of the options fundamentals](https://wheelmetrics.io/blog/options-fundamentals-complete-guide/) that support the Wheel, I've got a complete guide that ties everything together. ## Frequently Asked Questions **What are the most common options mistakes with the Wheel Strategy?** The seven most common options Wheel Strategy mistakes are (1) ignoring the Greeks when selecting strikes, (2) selling premium without checking volatility, (3) trading illiquid options, (4) skipping options fundamentals, (5) poor position sizing, (6) emotional trading, and (7) wheeling stocks you don't want to own. Stock selection is the most critical: you can get everything else right and still lose money on the wrong stock. **How do I avoid getting assigned on bad stocks with the Wheel?** Apply this litmus test before every trade: would you buy this stock at this price and hold it for 6-12 months, even WITHOUT the options premium? If the answer is 'No', don't sell the put. Avoid meme stocks, sky-high-valuation growth stocks, and anything you haven't personally researched. **Should I sell options when implied volatility is high?** Not automatically. High IV alone is not a green light. If historical volatility is equally high, the market is pricing in real risk, not handing out free money. Check IV Rank and Percentile, the IV/HV gap, and investigate why IV is elevated before selling. **How important is position sizing for the Wheel Strategy?** Position sizing is critical. Going all-in on a single CSP means one bad trade can wreck your account. Maintain capital reserves for managing assignments and new setups, and diversify across sectors to avoid concentration risk where multiple positions correlate and blow up together. **Why do emotional traders lose money with the Wheel?** Emotional traders panic-close positions that would have recovered, chase FOMO entries on hyped stocks they haven't researched, revenge-trade to 'make it back' after losses, and relax their rules out of impatience or lack of discipline. The fix is having a system with predefined rules in place before the emotions show up. **How do I check options liquidity before selling puts?** Check volume and open interest on the options chain at your target strike and DTE. Wide bid-ask spreads on illiquid options can silently swallow 20-50%+ of your collected premium on a bad fill. If the chain looks empty, pick a different stock or expiration. **What stocks should I avoid for the Wheel Strategy?** Avoid three categories: (1) meme stocks that run on hype with no earnings or revenue, (2) high-flier growth stocks with sky-high valuations where one earnings miss or negative forward guidance can gap the stock down 25%+, and (3) any stock you haven't researched well enough to explain what the company does and how it makes money. ## About the author **Adrian Rosebrock**, Founder, WheelMetrics. Hi there, I'm Adrian Rosebrock, PhD. I believe trading and investing should be systematic, not speculative. I built WheelMetrics to share the quantitative research and frameworks behind my Wheel Strategy process. My goal is to help you make smarter, more confident trading decisions. [Connect on LinkedIn](https://www.linkedin.com/in/adrian-rosebrock/) ## Disclaimer WheelMetrics is an educational resource, not financial advice. WheelMetrics is not a registered investment advisor, broker-dealer, or financial planner. Everything here, including articles, newsletters, stock screening results, options setups, market commentary, is for educational and informational purposes only. Options trading carries substantial risk, and you can lose some or all of your capital. You're solely responsible for your own investment decisions. Consult with a qualified financial advisor before making any trades. --- *WheelMetrics content is educational and is not individualized financial advice. Source: https://wheelmetrics.io/blog/options-trading-mistakes-wheel-strategy/*