Wheel2 legscreditbullish to neutral

Own 100 shares and sell a call above your basis. Income from stock you already hold, in exchange for agreeing to a price you will sell at.

You hold the shares; you sell someone the right to buy them from you at the strike. The premium is yours immediately, and it is compensation for capping your upside at that strike.

This is the second half of the wheel. After a put is assigned you own stock, and a call written above your cost basis turns that holding back into income while you wait.

The word covered matters: the shares you would have to deliver are already in the account. The same call sold without them is a naked call, whose loss is genuinely unlimited.

Priced off the guide's shared chain, on a $50 stock. Every figure beneath the diagram is computed from these legs by the same engine the Strategy Builder uses.

Above the strike the line is flat. Your gain is the strike minus your basis, plus the premium, and no rally beyond that adds a cent.

Below the strike you still own the stock, so the payoff tracks the shares down — the premium shifts the whole line up by $1.20 a share, which is the cushion.

One break-even: your basis less the credit received.

The strike choice is the entire decision. Above your basis, a call being exercised closes the cycle at a gain. At or below it, being called away locks in a loss on the stock that the premium may not cover.

That is why this platform floors a covered-call strike at the position's blended breakeven when a name holds more than one lot. Pricing a cheap lot off its own basis is what turns a repair into a realized loss on the expensive lot.

Implied volatility works the same way as on a put: richer IV means a bigger credit at the same strike, or the same credit further out of the money.

Like everything in this guide, these are descriptions of structures and conditions — context for your own decisions, not instructions to trade.