# Wheel: called away, repeat or stop

**OPT-06d · Core Options · Core**

**Lesson question:** What does the completed cycle earn, and does the next cycle still make sense?

Original fictional examples; educational writing, not live market data, orders or production approval.

## By the end

- Explain the mechanism in the lesson question.
- Reproduce the worked comparison and recognize its failure case.

**Prerequisites:** OPT-02c, OPT-07a

Having shares called away ends one set of obligations. It does not require automatically starting another put sale. A new cycle is a fresh allocation decision using current business quality, valuation, volatility and portfolio needs.

## Understand the mechanism

Realized P/L should include all share cash flows, option credits and debits, fees and any financing. Premium divided by strike is not a complete investment return if it ignores capital tied up and stock losses. Time and opportunity cost matter as well.

## Walk through the process

Close the ledger, compare with an appropriate alternative and review whether the original process was followed. Then decide whether the current entry price is attractive. A successful prior cycle does not establish that the next one has positive expectancy.

## A worked example

In the fictional sequence, initial cash was 10,000. The put earned 200, shares were purchased for 9,500, the call earned 150 and shares were ultimately sold at the 100 strike for 10,000. Final cash is 10,850 and gross cycle P/L is 850 before costs and taxes. If the shares instead remained at 70, the same collected premiums would not make the cycle profitable.

## Graph: Wheel: called away, repeat or stop—worked comparison

**Horizontal:** Ledger stage / settlement case  
**Vertical:** USD; see stage definitions

Fictional data from the written example. The chart organizes the comparison; its shape is not a forecast.

Complete numerical data are embedded in `scripts/options-strategies/OPT-06d.js` and displayed as an accessible table in the HTML lesson.

## What would invalidate the reading?

Reporting only the profitable called-away branch hides the strategy's long-stock downside. Repeating on a lower-quality stock to preserve premium income changes the risk profile.

## Check your understanding

### What is gross completed-cycle P/L in the stated called-away branch?

**Answer:** 850.

**Why:** 10,850 ending cash−10,000 initial cash; include all legs.

### What is the critical failure to avoid?

**Answer:** Reporting only the profitable called-away branch hides the strategy's long-stock downside. Repeating on a lower-quality stock to preserve premium income changes the risk profile.

**Why:** Explain this risk before treating the example as a decision rule. A correct calculation does not guarantee a favorable market outcome. **Critical risk check.**

## Takeaway

Return to the question: What does the completed cycle earn, and does the next cycle still make sense? State the observed facts, the assumptions and the failure condition separately.

## References and provenance

The cited references support definitions and conventions. The teaching prose, tickets and numerical scenarios are original; they are not attributed as historical market observations.

- [OCC Options Disclosure Document](https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document)

- [OIC Strategy Reference](https://www.optionseducation.org/strategies/all-strategies-en)