What If You Could Turn a Losing Trade Into a Winner—Without Taking the Loss?

Most covered call and cash-secured put traders hit a wall when their trades go against them. The stock blows through their strike price, they're staring at a loss, and panic sets in. But what if there was a way to defer that loss, improve your odds, and keep your original credit intact?

Enter the net-zero roll—the technique that separates winning traders from frustrated ones.

In this episode, Dan reveals how this powerful management strategy lets you "kick the can down the road" by rolling out in time and up or down in strikes for roughly the same premium you paid to close. The result? You preserve your credit, dramatically improve your probability of success, and—most importantly—keep your psychology steady so you're not losing sleep over one bad "wheel cog."

But here's the catch: your annualized return takes a hit. And that's where Dan's One-Third Rule comes in—a reality check that'll save you from disappointment and help you set realistic expectations for what wheel trading actually delivers.

Coach John Kmiecik joins the conversation to share his insights on screening, technical analysis, and the mindset shifts that separate struggling traders from those who trade with confidence and ease.

Why This Episode Will Change How You Think About Covered Calls and Cash-Secured Puts

The truth about annualized returns: They're marketing, not reality. Discover why your actual returns will likely be about one-third of your initial calculations—and why that's still excellent.

The net-zero roll explained: Learn the exact mechanics of buying back your short option and selling a later-dated, farther OTM option for approximately zero cost. It sounds like magic, but it's pure technique.

Psychology meets technique: Why does this strategy work so well? Because it removes the emotional weight of "losing" on individual trades and helps you see the bigger picture of the full cycle.

The One-Third Rule: Dan's back-of-the-napkin formula for setting realistic expectations. If you calculate 12% annualized, expect closer to 4%. Why? Rolls, adjustments, early exits, and the messy reality of trading.

When "perfect" isn't the goal: Stop obsessing over every strike price and learn to manage early and often. Small, proactive adjustments beat expensive, late-stage scrambles every time.

Your Practical Playbook

When to roll: As soon as price moves through your strike. Don't hope it comes back—act immediately.

How to structure the roll: Aim for net-zero or close to it. Small debits or credits across multiple "cogs" balance out over the cycle.

Screening and strike selection: Use technicals to guide you, but don't overthink it. The real edge is having a management plan, not picking the perfect strike.

Tracking your cycles: Log each trade within the cycle—credits, debits, days added, and new strikes—so you can see your true cycle P&L and learn from every wheel turn.

What You'll Walk Away With

By the end of this episode, you'll understand why experienced wheel traders don't sweat individual losses—they manage them. You'll see how the net-zero roll transforms a potential disaster into a highly probable win, and you'll learn to think in terms of complete cycles rather than isolated trades.

This is the mindset shift that took Dan decades to figure out. Now you can have it in under 40 minutes.

Resources Mentioned

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Disclosure:

Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD) which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document

Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.  

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