Combining covered call writing and selling cash-secured puts into one multi-tiered option-selling strategy is known as the Put-Call-Put (PCP) or “Wheel” strategy. In this article, a 68-day series of such trades will be analyzed, showing how a 160% annualized return was realized.
Graphic representation of the PCP (Wheel) strategy
- 1: Sell OTM cash-secured puts
- 2: If exercised, by shares at a discount
- 3: Sell covered calls on shares “put” to us
- 4: If exercised and shares are sold, use the cash to secured new put trades
Real-Life Example with Solaris Energy Infrastructure Inc. (NYSE: SEI): Initial put leg + rolling-up
- 1/20/2026: SEI trading at $55.77
- 1/20/2026: STO 2 x 2/20/2026 $42.50 puts at $1.16
- 1/20/2026: STO 2 x 2/20/2026 $37.50 puts at $0.58
- 2/13/2026: SEI trading at $59.50
- 2/13/2026: BTC 2 x 2/20/2026 $42.50 puts at $0.35
- 2/13/2026: STO 2 x 2/20/2026 $52.50 puts at $0.95 (rolled up)
- 2/13/2026: BTC 2 x 2/20/2026 $37.50 puts at $0.08
- 2/13/2026: STO 2 x 2/20/2026 $50.00 puts at $0.50 (rolled up)
Expiration Friday: 2/20/2026
- SEI closed at $49.24
- 4 contracts expiring ITM
- “Allowed exercise”
- History of earnings beats
- Held through 2/24 ER
PCP or Wheel Strategy with SEI: Call leg on 2/25/2026
- STO 4 x 3/20/2026 $60.00 calls at $3.51
- SEI trading at $55.22 (appreciated after the 2/24/2026 earnings release)
- Place a BTC/GTC limit order at $0.70 (20% guideline)
- 3/9/2026: Change BTC/GTC limit order to $0.35 (10% guideline)
- 3/20/2026: SEI closed at $61.81, and exercise and sale of the shares were “allowed”
- 3/23/2026: 400 shares of SEI sold at $60.00
Graphic representation of the 68-day trades
The PCP or Wheel Strategy: Realized results from 1/20/2026 – 3/20/2026
Discussion
Mastering both covered call writing and selling cash-secured puts will provide opportunities for greater returns by invoking the PCP (Wheel) strategy. It results in prospects of generating cash flow as well as buying shares at a discount. In this real-life example, an annualized 160% return was realized.
Selling Cash-Secured Puts: Softcover
Using stocks and stock options to develop a low-risk, wealth-building strategy for retail investors. Selling puts is a strategy similar to, but not precisely the same as, covered call writing. Mastering either strategy is a huge opportunity for retail investors to secure our financial futures. Mastering both will allow us focus in on the best investment choices depending on market conditions and personal risk tolerance.
Your generous testimonials
Over the years, the BCI community has been incredibly gracious by sending our BCI team email testimonials sharing stories as to what our educational content has meant to their families. Moving forward, we have decided to publish several of these testimonials in our blog articles. We will never use a last name unless given permission:
From an attorney who hired Alan as an expert consultant & witness in a multi-million-dollar options trial:
Alan,
Sample Alan Losing Trade Video
1. Mad Hedge Investor Summit
Wednesday September 16, 2026
12 PM ET – 1 PM ET
The Collar Strategy: Covered Call Writing with Protective Puts
Protecting covered call trades from catastrophic share loss
Protect our covered call trades by purchasing protective puts. This results in lower risk transactions, with lower, but still significant option returns. This is the strategy Bernie Madoff pretended to use. He called it the split strike conversion strategy, but it was simply a collar. The covered call sets a max gain and the protective put guarantees a maximum loss.
Topics discussed
- What is the collar strategy?
- Uses for the collar
- Entering a collar trade
- Option basics for calls
- Option basics for puts
- Real-life example with NVDA
- What is an option-chain?
- Real-life example using the BCI Trade Management Calculator (TMC)
- Strategy pros & cons
- Event offer
- Q&A
Registration link to follow.
2. Toronto Money Show
September 24 – 25, 2026
MaRS Center, Toronto Canada
Generating a 3rd Income Stream in Existing Stock Portfolios
Details to follow.
3. Orlando Money Show
October 5 – 7, 2026
Hilton Orlando Lake Buena Vista
3 presentations:
- Portfolio Overwriting (2-hour Master Class)
- Setting Up High-Performance Option Portfolios
- Selling Cash-Secured Puts: The 2 Outcomes
Details to follow.
4. American Association of Individual Investors: NYC Chapter
Date and time to be confirmed.
5. Triple Edge Investing Summit: Technical Analysis • Options Strategies • ETF Mastery
Saturday January 23, 2027- All-day event
Zoom presentation
All-day paid event
All-day event hosted by 3 experts:
- Dr. Alan Ellman (options)
- Dr. Eric Wish (technical analysis)
- Les Masonson (ETFs)
Hosted by TraderLion University
Details to follow.
Premium Members,
This week’s Weekly Stock Screen and Watch List has been uploaded to The Blue Collar Investor Premium Member site and is available for download in the “Reports” section. Look for the report dated 07/24/26.
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Barry and The Blue Collar Investor Team
Alan,
Love your system and its analytical yet understandable approach. There is nothing like it out there. Most are so complicated and complex that the average person (the blue collar investor) gets lost in the details early on.
I am in the portfolio overwrite scenario. I have gold-related stocks that I want to keep in the portfolio (my favorites are GLD; RGLD; and WPM). Because of the run-up in the share price of these stocks earlier this year, I currently have a basis that is well above the CP. So I sell conservative OTM C/Cs (Delta around .25) well below my basis that get me ~10% annualized returns (vs. the 20%-30% when my basis is closer to CP). My question is whether you have discussed (books or “Ask Alan”) the strategy for placing BTC orders to buy back the options like this to protect against the large losses if the stock closes in on the SP and if exercised results in large losses for me. Although the #244 “Ask Alan” covers a different situation (ITM Calls), is the concept (20%/10%) the same or similar?
Thanks Alan,
Charles
Charles,
I appreciate your generous feedback.
Let’s review:
• You own securities that are currently trading at lower prices than your cost-basis
• You are selling 25-delta strikes to generate 10% annualized returns
• These OTM strikes are still below the cost-basis
• You want to avoid exercise and sale of your shares to avoid realizing share losses
• Do our 20%/10% guidelines apply in this situation?
If I have all that right, here are points to consider:
• Evaluate the reasons for retaining these under-performing securities. If your analysis is such that you anticipate share price recovery in the near future, this approach makes sense. If it is fear of realizing a loss, you may want to re-evaluate where to place the cash remaining in these stocks/ETFs. It’s not the securities we care about; it’s the cash we have invested in them that’s critical.
• It is extremely important to avoid earnings report dates and ex-dividend dates.
• The 20%/10% guidelines for covered calls apply to protecting against share price decline; the concern here is for extreme share price acceleration. There is nothing wrong with placing the BTC/GTC orders because it may result in rolling-down opportunities, while still retaining the shares.
• Avoiding exercise is relatively easy by buying back the short call near expiration if share price is near or above the strike sold. Again avoid earnings and ex-dividend dates.
Alan
Premium Members:
1. This week’s ETF Report has been uploaded to your member site. Login to the member site and scroll down on the left side to access the report.
ETF Report Video Link:
Explanation of the report format:
https://youtu.be/addf7Y54ixwput
2. I’ve attached to premium member emails a 5-day, defensive cash-secured put trade with XOP, an elite-performing ETF at the time of the trade. I executed these trades on 7/27/2026, for the 7/31/2026 expirations. This is another example of the protection offered by OTM put strikes, while still offering meaningful returns. XOP closed at $172.04 today, up $2.13 from trade entry. The current price is above the breakeven price by $8.79 and $8.04 above the put strike. With 2 days remaining until expiration, I’m in a favorable position with these 2 contracts. As always, I am prepared to initiate exit strategy maneuvers, if those opportunities are presented.
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4. Sample Alan Winning Trade Video:
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Wishing you the best results,
Alan & the BCI team