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The Omega Wheel Decision Tree
Every cash-secured put you sell resolves into exactly 3 outcomes. Here's what to do in each — decided in advance so emotion never drives.
You sold a cash-secured put. It's now 5–7 days to expiration. What do you do?
Sold cash-secured put
│
┌────────────┼────────────┐
▼ ▼ ▼
Outcome A Outcome B Outcome C
Winner Middle Assigned
(>50% profit) (0–50%) (in-the-money)
│ │ │
CLOSE EARLY HOLD or ACCEPT
(redeploy cap) ROLL FOR ASSIGNMENT
CREDIT (start CC leg)
Outcome A — The 50% profit rule
Trigger: the put you sold at $2.00 is now worth $1.00 or less (mark-to-market from your broker).
Action: Buy-to-close it. Do not wait for expiration to squeeze the last $1 out.
Why: You've captured half the premium in a fraction of the time. Annualized return on the closed portion is higher than holding to expiration. Free the capital to sell the next put.
Then: immediately scan for the next 30–45 DTE / 0.22–0.28 delta opportunity.
Outcome B — The middle zone
Trigger: put is worth 50%–100% of what you sold it for; underlying is chopping sideways; there's still 5–7 DTE.
Two paths — pick one based on the underlying:
B1 — HOLD if:
- You still love the stock
- Delta hasn't drifted materially (still < 0.40)
- No earnings inside remaining DTE
→ Let theta do its work. Set a reminder at expiration to re-check.
B2 — ROLL FOR CREDIT if:
- Delta has drifted to 0.40+ (put is inching in-the-money)
- You want to defer assignment but keep collecting
- You can roll DOWN and OUT for a net credit (not a debit)
Roll mechanics:
- Buy-to-close current put
- Sell-to-open a new put at a lower strike, 30–45 DTE further out
- ONLY if the combined trade is a net credit
- Never roll for a debit. If the only escape is a debit, accept assignment instead.
Outcome C — Assigned
Trigger: expiration arrives with the underlying below your strike. You now own 100 shares per contract at the strike price.
Do not panic. This is a designed outcome of the strategy.
Immediate actions:
- Confirm assignment in the broker (usually appears Monday morning).
- Note your TRUE cost basis:
Strike − Premium collected on the put (see the Cost Basis Tracker).
- Same day or next: sell a covered call at or above your true cost basis, 30–45 DTE, delta 0.20–0.30.
- Log the wheel cycle in your journal.
C1 — Stock is only slightly below strike (normal case)
- Sell a covered call at or above true cost basis
- Let the stock either get called away (you profit) or continue collecting call premium (you profit)
C2 — Stock is significantly below strike (>10% below)
- Options: (a) sell CC at a lower strike and accept locking in a loss if called away, (b) sell CC at cost basis very far out (60–90 DTE) accepting less premium, (c) hold the shares and wait for recovery
- Reference: Module 5 "The repair playbook when a stock keeps falling"
What NEVER to do
- ❌ Panic-close a put at a loss just because the underlying dipped. If your entry was disciplined, hold or roll — don't puke.
- ❌ Roll for a debit. That's paying to defer a loss, which mathematically prolongs the pain.
- ❌ Sell puts on stocks you wouldn't want to own. Every put you sell is a promise to buy at the strike.
- ❌ Overtrade — sell so many contracts that assignment on all of them would blow up your capital allocation.
- ❌ Chase juicy premium on garbage tickers. The market is priced correctly — high IV = high risk.
What ALWAYS to do
- ✅ Enter with a plan for all 3 outcomes before you sell the put
- ✅ Journal every wheel cycle — entry premium, exit, whether assigned, CC leg P&L, total cycle return
- ✅ Follow the 50% rule when it triggers — don't be greedy
- ✅ Accept assignment as a feature, not a failure