The Wheel or Credit Spreads?

I can’t decide between the wheel and credit spreads for steady income. The wheel needs a lot more capital, but if a trade goes against me I can just start selling covered calls and slowly work my way back. Credit spreads need way less money, but when one goes bad I have to take the loss with no real way to recover it, so I’d have to be much stricter about managing risk. Which one makes more sense if income is my main goal?

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u/aayush-goenka 1 3 days ago

Depends on your risk profile. I choose wheel, but only on quality stocks I want to own at a cheaper price or sell a quality stock I think gives lesser gains in future than other opportunities. Credit spreads are great, if you understand that you could lose all of it if you max out your capital doing it. If you still keep reserves in case it draws down (put credit spread for example), and you can buy the shares on assignment without margin risk, then it is fine too. So yes, your risk tolerance and strategy dictates what you choose.