The S&P 500 has outperformed my Wheel Strategy portfolio by roughly 11 percentage points over the same period.
That comparison is real.
The question is what you're supposed to do with it.
Should you conclude that the strategy no longer works? Or should you ask whether you're judging it by the wrong standard?
This is one of the hardest parts of investing because every strategy eventually goes through periods where it looks inferior to something else. The real challenge isn't identifying the best-performing strategy over the last few months. It's understanding whether temporary underperformance actually tells you anything about the process itself.
Performance Alone Doesn't Tell the Whole Story
When investors compare strategies, they usually compare returns.
That makes sense. Returns are measurable.
The problem is that returns don't explain why they happened.
A strategy can underperform because:
- the market environment doesn't favor it,
- the strategy was executed poorly,
- the original assumptions were wrong,
- or the process has genuinely stopped working.
Those are completely different situations, yet many investors treat them as if they were identical.
What the Wheel Strategy Is Actually Designed to Do
The Wheel Strategy is not designed to maximize upside during powerful bull markets.
Its objective is different.
The process consists of:
- Selling cash-secured puts on companies you're willing to own.
- Collecting option premium while waiting.
- Accepting assignment if necessary.
- Selling covered calls against the assigned shares.
- Repeating the cycle.
This creates a portfolio that prioritizes:
- premium income,
- disciplined entries,
- defined trade management,
- and lower dependence on perfectly timing the market.
The trade-off is obvious.
When markets rally aggressively, an index fund remains fully exposed to every dollar of upside.
The Wheel often gives part of that upside away in exchange for option premium.
It's part of the design.
Process Versus Outcome
Imagine two investors.
One buys the S&P 500. The other runs the Wheel Strategy.
After six months, the index wins comfortably.
Does that automatically prove the Wheel was the wrong decision?
Not necessarily.
A process should be evaluated against what it was intended to accomplish.
If the Wheel:
- generated premium,
- entered positions at planned prices,
- managed assignments correctly,
- and followed predefined rules,
then the process may have worked exactly as expected, even if another strategy produced higher returns during the same period.
Outcome and process are related. They are not the same thing.
The Biggest Investing Mistake Isn't Temporary Underperformance
Most investors don't fail because they choose terrible strategies.
They fail because they abandon reasonable strategies before those strategies have time to work.
The cycle usually looks like this:
- Options selling underperforms.
- They switch to momentum.
- Momentum cools down.
- They move into dividend investing.
- Value begins outperforming.
- They rotate again.
- Then leverage becomes popular.
The strategy changes. The motivation rarely does.
Instead of following a consistent framework, they're chasing whichever approach produced the best recent returns.
The result is predictable.
They experience the difficult phase of almost every strategy while rarely staying invested long enough to benefit from any of them.
The Questions Worth Asking
When performance disappoints, the first question shouldn't be:
Should I abandon the strategy?
Instead, ask questions that help evaluate the process itself.
Did My Assumptions Prove Wrong?
Was the original investment thesis flawed?
Did I misunderstand how the strategy behaves under these market conditions?
Was Position Sizing Appropriate?
Even good strategies become dangerous when positions are oversized.
Risk management often matters more than strategy selection.
Would I Still Buy These Companies Today?
Assignment should never leave you holding businesses you no longer want to own.
If your conviction has changed, that's worth investigating.
Is the Market Simply Favoring a Different Approach?
Every strategy has environments where it naturally performs better or worse.
A passive index fund and the Wheel Strategy are solving different problems.
Comparing them without considering those differences can lead to poor conclusions.
Every Investment Strategy Has a Cost
There is no investment approach that delivers attractive long-term returns without asking something from the investor.
Sometimes the price is volatility.
Sometimes it's years of underperformance.
Sometimes it's accepting that another strategy will outperform yours for extended periods.
The cost simply changes depending on the framework you choose.
Investors often focus on returns.
Far fewer think about the psychological price required to earn those returns.
The Real Test of Discipline
Discipline isn't refusing to review your strategy.
Reviewing your decisions is essential.
The important distinction is why you're making changes.
Improving a process because you've identified genuine weaknesses is rational.
Abandoning a process simply because another one has recently produced better numbers usually isn't.
That's performance chasing.
History shows it's one of the most common ways investors reduce their long-term returns.
Final Thoughts
My Wheel portfolio may currently be trailing the S&P 500.
I'm not ignoring that comparison.
But I also don't believe it automatically tells me to abandon the framework.
Instead, it reminds me of the trade-offs I accepted from the beginning:
- less upside during strong rallies,
- more disciplined entries,
- recurring premium income,
- and a systematic investment process.
Every strategy will eventually be tested.
The important question isn't whether the test exists.
Continue Learning
If you're new to the Wheel Strategy, start here:
- What the Wheel Strategy Actually Is
- How to Read an Options Chain Without Overloading on Data
- When to Close Options Early
- How to Calculate Option Premium
// WIZOLVER.LOG — NOT FINANCIAL ADVICE. Options trading involves substantial risk. This website documents a personal research process and should not be considered investment advice. Always perform your own due diligence.