The Put-Call-Put (PCP) or Wheel Strategy – June 15, 2026
The Put-Call-Put (PCP) or Wheel Strategy is a multi-tiered option-selling strategy that incorporates both selling cash-secured puts and covered call writing. In this article, a real-life example, taken from one of my option portfolios, will be analyzed to show the advantages of mastering both strategies.
Graphic representation of the PCP (Wheel) strategy
- #1: Start by selling an OTM cash-secured put
- #2: If and when exercised, the stock or ETF is purchased at a discounted price
- #3: Covered calls are written against the recently purchased shares
- #4: If and when exercised, shares are sold generating the cash to then secure another put trade (back to #1)
Real-life example with Nextracker Inc. (Nasdaq: NXT)
- 11/10/2025: STO 4 x 11/21/2025 $90.00 puts at $0.77 (NXT trading at $106.50)- Put leg
- 11/24/2025: Buy 400 x NXT at $90.00 (“allow” put exercise on 11/21/2025 as NXT below $90.00)
- 11/24/2025: STO 4 x 12/19/2025 $95.00 calls at $3.12 (covered calls)- Call leg 1
- 12/19/2025: NXT closes at $88.34; $95.00 calls expire worthless
- 12/22/2025: STO 4 x 1/16/2026 $95.00 covered calls at $3.51- Call leg 2
Expiration of the 1/16/2026 Call Contracts: 2nd call leg
- NXT closes at $96.36
- Decided to allow assignment and sell 400 shares at $95.00 due to its upcoming earnings report on 1/27/2026
68-day final PCP calculations spreadsheet
Discussion
- Significant returns can be generated with 68-day defensive Put-Call-Put (PCP) or Wheel trades
- Option trades can be crafted to align with all market environments and personal risk tolerance
- In the case of NXT, a significant 68-day return was initially captured and realized (73.95% annualized)
- These are low-risk, not no-risk trades
Author: Alan Ellman