How it works

The Wheel Score, explained

9 Wheel Trade Filters decide which stocks qualify. The Wheel Score ranks them. The Sunday Scan is the top 10. The 7 steps show you how to trade them.

From every US stock to this week's list

  1. ~7,400US stocks valued every night
  2. ~3,800have listed options
  3. a few hundredpass all 9 Wheel Trade Filters
    = a Wheel Score of 70 or more
  4. Rankedby Wheel Score, best first
  5. Top 10the free Sunday Scan
    at most 2 per sector ยท Pro: top 25

Numbers from the latest Sunday Scan.

First: the 9 Wheel Trade Filters

Pass or fail. A stock must pass all nine to score 70 or more; fail any one and its score stays under 70, and its badge says which filter it missed. They are ordinary filters - on the Stocks scanner, open Wheel Trading and click Load Wheel Trade Filters to set all nine, then change any of them to suit your own trading.

  1. Options that actually trade - listed options with 1,000+ contracts of open interest and 100+ traded a day
  2. A real business, not a gamble - profitable over the last twelve months - not a speculative stock, fund or note
  3. Below fair value - trading below the nine-model average fair value (margin of safety above 0)
  4. Financially healthy - Piotroski F-score 6 or more out of 9 (a company with no score on file passes)
  5. Can repay its debt - long-term debt repaid from 3 years of operating cash flow or less (6 for real estate and utilities; banks and insurers are not judged on it)
  6. No serious red flags - Red Flags score 60 or more out of 100
  7. A premium worth selling - implied volatility 25-80% (enough premium, not a lottery ticket)
  8. Big enough - market cap $1 billion or more
  9. Not a penny stock - share price $5 or more

Then: the ranking, from 70 to 100

Every stock that passes is a wheel candidate. The score then puts them in order - the better a stock does on these, the higher it ranks:

Hover any Wheel Score on the site to see how the stock rates on each one: Strong, Good, Fair or Weak.

Reading the badge

85+ Prime

Passes all 9 filters and stands out in the ranking.

70-84 Good

Passes all 9 filters.

50-69 Fair

Fails at least one filter.

0-49 Weak

Fails at least one filter, and ranks low on the rest.

The Sunday Scan is not a band: it is simply the top 10 by score among the stocks that pass, so most weeks it is Prime names, and in a pricey market it can include Good ones.

What the score leaves to you - the 7 steps

The filters and the score pick the stocks. Trading them takes decisions only you can make: the next earnings date, a support level for the strike, how much of your account one trade should take. The free lesson Trading the Wheel Strategy walks through them, click by click:

  1. Set up once - your account type and position size
  2. Scan - the Wheel Trade Filters on the Stocks scanner
  3. Save the scan and the results
  4. Shortlist - earnings, dividends, one or two per sector
  5. Build the portfolio on the Test board
  6. Place and record the trades
  7. Run the wheel - puts, shares, covered calls, repeat

Questions

Why does a stock that fails only one filter score under 70?

Because every filter matters for the wheel: a stock with dead options, or one losing money, is not a candidate however well it does on the rest. Only stocks that pass all nine can reach 70.

How often is it updated?

Every night, after the valuation engine runs on the latest prices, filings and option chains. The Sunday Scan is taken from Sunday's numbers.

Can I use different filters?

Yes. Load the nine on the Stocks scanner and change any of them - a lower price limit for a smaller account, a higher open interest, a narrower implied volatility range. The score itself always uses the published nine.

Is a high score a buy signal?

No. It is a starting point for your own research. Check the next earnings date and the chart before you sell a put, and size every trade to your own account. Not advice.

Get the Sunday Scan

Or read the latest issue.