Which stocks work for the Wheel? A no-BS checklist for filtering candidates
Most stocks fail at least one Wheel criterion. Here's the 7-point checklist we use to filter the universe down to a handful of real candidates — with concrete examples.
The Wheel strategy works on a surprisingly narrow slice of the market. Most stocks fail at least one criterion. The good news: once you internalize the filter, you can disqualify 90% of candidates in 30 seconds.
This post is the exact checklist we use, in priority order, with examples of what passes and what fails.
The 7-point checklist
A stock qualifies for the Wheel if it passes all 7:
- You'd own it for 3–12 months.
- Price between $10 and $100.
- Liquid options chain (open interest > 100 on near-strike contracts).
- IV rank between 30 and 60 (this week).
- No earnings within the expiration window.
- Sector you understand.
- No binary catalysts (FDA, lawsuit, major regulator decision).
Let's go through each.
1. Would you own it for 3–12 months?
The single most important filter. The Wheel assumes you might get assigned. If you wouldn't be okay holding the stock through a 20% drawdown for several months, you shouldn't be selling Puts on it.
Quick test: "If the stock dropped 25% tomorrow and I got assigned, would I feel sick or annoyed-but-okay?" If the answer is "sick," skip.
Passes: AAPL, MSFT, JPM, BAC, COST, JNJ, KO, F. Fails: random small-cap you've never heard of, levered ETF, IPO'd 3 months ago.
2. Price between $10 and $100
Below $10: penny-stock territory. Premiums look high in percentage terms, but the spread is wide and the company quality is usually poor.
Above $100: each contract ties up too much capital. AAPL at $230 means $23,000 of collateral per Put contract. Most retail accounts can't diversify across 5+ names at that size.
The sweet spot is $10–$100 because:
- One contract = $1,000–$10,000 collateral, manageable for accounts in the $10K–$100K range.
- Options chains are deep, with strikes spaced $1 or $2.50 apart.
- Liquidity tends to be solid.
Passes: SOFI ($10), F ($14), PLTR ($25), HOOD ($50), AMD ($75). Fails: BBBY ($2), AAPL ($230), GOOG ($175), TSLA ($300).
If your account is small, lean toward the lower end ($10–$30). If your account is $100K+, you can move up to $50–$100 names.
3. Liquid options chain
You need contracts with at least 100 open interest on the strikes you're considering. Below that:
- Bid-ask spreads get wide. You give up 5–10% of premium just to enter.
- Closing the trade early becomes painful.
- Rolling becomes nearly impossible.
How to check: open the options chain in your broker. Look at the open interest column for the strikes around current price, ±10%. If they're all > 100, you're good.
Typically liquid: SPY, QQQ, AAPL, MSFT, F, SOFI, PLTR, NVDA, BAC, JPM. Often illiquid: random mid-cap industrials, recent IPOs, foreign ADRs.
4. IV rank 30–60 this week
(Full deep-dive in What is IV rank?.)
Quick recap:
- IV rank < 30: premiums too small to be worth it.
- IV rank 30–60: the Wheel sweet spot.
- IV rank > 60: something is going on. Probably an earnings event or a sector spike. Be careful.
If a stock you love has IV rank 12, just wait. IV rank cycles up and down throughout the year. It'll be in your range eventually.
5. No earnings within the expiration window
Earnings can move a stock 10–25% overnight. Selling a 30-day Put through earnings is gambling, not income.
How to check: Google "
- Pick an earlier expiration (e.g., 14 DTE that ends before earnings).
- Pick a longer expiration (e.g., 60 DTE that ends a full week after earnings).
- Skip this stock until earnings is past.
The post-earnings window (1 week after) is often a great time to sell Puts — IV crashes, but premium is still higher than baseline, and there's no catalyst within the window.
6. Sector you understand
This is qualitative but important. If you can't explain in one sentence what the company does and what its main risk is, you don't know enough to own it.
You probably understand: banks (lend money, get paid interest), big tech (sells software/devices/ads), consumer staples (sells stuff people buy in recessions), retailers, autos.
You probably don't understand (without doing real homework): biotech, semiconductors at the equipment-supplier level, specialty REITs, oil & gas E&P, fintech-adjacent regulators, anything with "AI infrastructure" in the description but no product.
If you don't understand the company, you can't judge what's a "20% drawdown is fine" vs. "this is a permanent impairment." That distinction matters when you get assigned.
7. No binary catalysts
Binary events that can crater a stock 30%+ in a day:
- FDA approval/rejection (biotech).
- Major lawsuit verdict.
- Antitrust deadline.
- Merger / takeover vote.
- Bankruptcy filing.
- Earnings (covered separately above, but worth re-mentioning).
The Wheel assumes the stock might drop 10–20%. It does NOT assume the stock might drop 50% overnight. Binary catalysts violate that assumption.
If a stock has a known binary event in the next 90 days, push it out of your Wheel rotation until the event is past.
The "always good" list (educational, not advice)
A handful of names that usually pass all 7 filters during normal market conditions:
- SOFI — affordable, liquid, no binary catalysts, decent IV
- F — cheap, dividend-payer, you know what they make
- BAC, JPM — boring banks, liquid options
- COST, WMT — recession-proof consumer staples
- HOOD — fintech, liquid, well-known
- PLTR — tech-flavored but consistent revenue, liquid
Don't take this as a buy list. Take it as "these are the kinds of stocks that pass the checklist." Your own list depends on what you'd be happy to own.
The "never" list
These are categorically bad Wheel candidates:
- 3x leveraged ETFs (TQQQ, SQQQ): the decay alone eats your premium.
- Penny stocks (< $5): wide spreads, low quality.
- Recent IPOs (< 2 years of trading history): unstable, lockup expirations cause crashes.
- Pre-revenue biotechs: pure binary events.
- Single-product meme stocks (GME, AMC during meme phases): IV is insanely high but the underlying volatility is even higher.
How WheelAI does this filter
The AI Screener takes your capital, risk level, and existing positions, and applies a version of this exact checklist. It filters to 3–5 candidates and explains why each one passed (e.g., "PLTR — IV rank 45, no earnings for 6 weeks, liquid 30-DTE contracts at delta 0.28").
You can still disagree and pick a different stock. But the AI does the screening so you don't have to look at 200 tickers.
Want it done for you? Download WheelAI on the App Store →
This article is for educational purposes only and is not financial advice. Options trading involves substantial risk. Consult a licensed financial advisor before making investment decisions.