The strategy seeks to generate total returns from options premiums, dividends and gains from capital appreciation. This is a primarily large capitalization, concentrated stock strategy combined with an actively managed options wheel strategy to generate income and capture returns in rising, falling and flat markets, creating a methodical method for making steady gains.

The options wheel strategy is a combination of two option selling strategies which are performed repeatedly over time, alternating between each. It involves selling covered calls and cash secured puts over a long term time frame, and can be an alternative to the traditional “buy and hold” method. It is an income based strategy for making small but consistent returns, which is the opposite of gambling on long calls and puts. The option wheel’s goal is to keep collecting premium and allow the option to expire worthless (or buying to close for a profit). Essentially, we are getting paid to open and close positions in stocks.

For investors who have the capital required, this strategy can be used as part of their “core-satellite” investment, which is used by institutional investors. The strategy can also complement an overall portfolio’s asset allocation by providing the flexibility to supplement the “buy and hold” method with tactical, short term opportunities or market trends, greater portfolio diversification and potential to enhance returns.