Wheel Glossary
Capital at risk in Wheel Trading
Capital at risk means the cash or stock value committed to an open wheel position. It matters because it is the denominator that makes weekly premium percentages honest.
Definition
The cash or stock value committed to an open wheel position.
- Translate the term into position sizing and trade management, not just vocabulary.
- Ask how the term changes your entry, adjustment, or exit.
Why it matters in the wheel
It is the denominator that makes weekly premium percentages honest.
- A useful definition should change what you track each week.
- If the term does not affect capital, assignment, or premium quality, it is usually secondary.
Common mistake
Judging premium in dollars without checking how much capital is tied up.
- Most wheel errors come from skipping the denominator behind the term.
- Write the term in plain language inside your trade notes before you use it.
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