ORATS – Driven By Data Ep. 143 — Safer Wheel Strategies
The wheel strategy is one of the most popular ways retail traders generate income from options, but Matt Amberson, ORATS’ founder, opens this episode with a pointed critique of how most people run it: selling a cash-secured put with no protection at all, which he argues isn’t really “secured” against anything except your entire brokerage balance. Rather than abandoning the wheel, Matt and co-host Tyler spend the episode building a genuinely safer version of it — a diagonal put spread where you sell a farther-dated, closer-to-the-money put and buy a shorter-dated, further out-of-the-money put against it, capping the downside while still collecting real premium.
The bulk of the episode is a live screening walkthrough using ORATS’ stock scanner, and it’s a good demonstration of how deliberate candidate selection has to be for this to work. Matt filters for stocks with a reasonable PE ratio (10 to 33, both trailing and forward), a minimum share price around $40, high ORATS confidence scores, tight bid-ask spreads, favorable contango in the term structure, and — critically — a high implied volatility percentile and steep put-call skew, since the whole strategy depends on getting paid well for the puts being sold. He’s candid that this filter set is intentionally narrow, since a scan across every symbol in the market would surface leveraged ETFs and other names that have no business in a wheel-style trade.
Once the stock scan narrows the field, Matt moves to the option scanner to find the actual diagonal spread — in this case landing on WCC, selling a roughly 150-day put and buying one around 90 days out further out of the money, targeting a net credit around 3% of the stock’s value. He pulls up the risk profile tool to show exactly why this structure is safer: instead of the steep, uncapped loss curve of a naked short put, the diagonal’s downside flattens out well before a worst-case scenario, trading a smaller slice of the maximum profit for real, visualized protection. He backs this up with his own real-money example from a SpaceX put he’d sold naked, which cratered when volatility collapsed — a mistake he says a protective long put would have prevented.
Beyond the trade construction itself, Matt spends real time on trade management, which is arguably the more valuable part of the episode for anyone actually running this strategy. He walks through setting profit-target and time-based alerts — targeting something like an 80% return on the capital at risk, or exiting automatically within five days of expiration regardless of where the trade stands — and demonstrates rolling a short put that’s decayed down to a few cents into a fresh one closer to the money, effectively resetting the position’s protection without closing it outright. He also shares a live, slightly underwater Oracle position from his own paper trading account as an honest example that even a well-constructed trade can go against you, and that the point of the structure is to keep a loser survivable, not to guarantee a win.
What makes this episode a useful reference beyond the specific WCC example is how transparently Matt and Tyler walk through the actual friction points — loosening scanner filters when too few candidates show up, deciding how far out in time to structure the diagonal, and figuring out realistic limit prices in a wide market. For traders who’ve run the standard wheel and gotten burned by an uncushioned drop, this episode offers a genuinely different, better-defined version of the same core idea.
