Covered Call Strike Selection When Using the PCP or Wheel Strategy – April 27, 2026
The PCP (Put-Call-Put) or Wheel Strategy is a multi-tiered option-selling strategy that combines selling cash-secured puts and covered call writing. In the BCI methodology, we (almost) always use out-of-the-money (OTM) put strikes, agreeing to buy shares at a lower price than current market value. If and when those shares are “put” to us, what is the moneyness of the call strikes (in-the-money, at-the-money or OTM) that should be used in the next leg of PCP? In this article, a real-life example with Intel Corp. (Nasdaq: INTC) will be analyzed to demonstrate the available, reasonable choices.
Graphic representation of the PCP or Wheel Strategy
- Start by selling an OTM cash-secured put
- If exercise does not occur, continue selling OTM puts
- If exercise does occur, shares are purchased at a discounted price
- OTM calls can be sold for a traditional (aggressive) approach
- ITM calls can be sold to be more defensive
PCP or Wheel Strategy with INTC with Weekly & Monthly Options
- 12/8/2025: INTC trading at $41.94
- 12/8/2025: STO 4 x $40.00 12/12/2025 put at $1.19 (weekly)
- 12/12/2025: INTC closed at $39.51, and 400 shares put to us at $40.00 ($38.81 BE)
- 12/15/2025: INTC opens at $38.32
- 12/15/2025: STO 2 x 1/16/2026 $38.00 ITM calls at $3.05 (defensive trade)
- 12/15/2025: STO 2 x1/16/2026 $42.00 calls at $0.80 (more aggressive trade)
Put Calculations Trade Entries with the BCI Trade Management Calculator: Closed the week at $39.51 (from $41.94)
The 5-day unrealized return (shares not sold) at contract expiration is $280.00 or 1.80% (yellow cells on bottom right)
Covered call monthly initial traditional & defensive trades
- The ITM $38.00 call has an initial 33-day return of 5.89%, 65.20% annualized (brown cells), with 2.09% protection to breakeven (BE)- purple cell
- The OTM $42.00 call has an initial 33-day return of 2.06%, 22.80% annualized (pink cells), with 8.22% upside potential- blue cell
Current PCP or Wheel trade status
Discussion
In our BCI methodology, when using the PCP or Wheel Strategy, OTM cash-secured puts initiate our trades. If exercised, ITM calls are used to craft defensive trades and OTM calls are implemented when seeking traditional or more aggressive trades.
Author: Alan Ellman