Protocol Update: The High-Octane Wheel Strategy

My 2026 plan to prioritize absolute volatility, increase capital velocity, and unveil my new proprietary entry indicator.

We are currently in that strange limbo week between Christmas and New Year’s. The market is quiet, volume is thin, and it’s the only time of year I actually have time to sit down and look at the data.

And the data told me something I didn’t want to hear: I’ve been leaving money on the table…but not in the way you think.

For a long time, the standard advice for the Wheel Strategy (selling cash-secured puts and covered calls) has been to play it safe. Pick boring dividend stocks, sell low-delta puts, and treat it like a bond replacement. It’s safe, it’s comfortable, and quite frankly, it’s slow.

The standard Wheel Strategy loop: Cash → Put → Stock → Call → Cash. We are optimizing the "velocity" of this cycle in 2026.

After hundreds of hours of backtesting and reviewing my own 2025 logs, I’m making a pivot for 2026. I am shifting the CSP Lab portfolio from a passive income mindset to a Higher-Octane Framework.

Here is the educational breakdown of how I’m changing my approach in the new year, and why the standard advice might be holding you back.

1. The Trap of IV Rank

If you read any options textbook, it tells you to sell premium when IV Rank is high. The logic is that you want to sell when volatility is elevated relative to the past year.

I’m throwing that metric out in 2026.

Here is the problem: A boring utility stock might have an IV Rank of 80%, but because it never moves, the actual premium you get is pennies. Meanwhile, a high-growth tech stock might have a “low” IV Rank of 20%, but because the stock is naturally volatile, the premium is massive.

For 2026, I am focusing on Absolute Volatility. I don’t care where volatility is compared to last year; I care if the premium dollars I collect today are enough to compensate me for the risk. We are looking for the Variance Risk Premium - where the market’s fear is overpriced relative to what the stock actually does.

2. Hunting High-Octane Quality

The biggest change to the portfolio will be asset selection.

The old way was to wheel Dividend Aristocrats. The problem is that these stocks have such low beta (volatility) that you have to use massive leverage to get decent returns.

The new plan targets Tier 2 Growth. These are companies that are:

• Profitable (P/E > 0)

• Growing sales (20%+ Year-over-Year)

• Institutionally owned

We want stocks that have good volatility, movement driven by earnings growth and innovation, not ‘bad volatility’ driven by bankruptcy risk. This allows us to capture much richer premiums without touching garbage meme stocks. Most importantly, we want names where institutional money is involved not retail meme stocks.

3. Velocity Over Duration

This is the hardest habit to break. When you sell a put and see a nice profit, the temptation is to hold it until expiration to squeeze out every last cent.

The math says this is wrong.

In 2026, I am religiously following the 50% Rule. If I sell a put for $2.00, I am buying it back at $1.00. Period.

The first 50% of profit usually comes quickly. The last 50% takes forever. By closing early, we free up our buying power to reload into a new trade, which allows us to compound returns faster. It’s about Capital Velocity, cycling the same dollar through the market multiple times a month rather than parking it for 45 days.

The Math of the 50% Rule: We target the "Goldilocks Zone" (45-21 DTE) to capture the safest part of the decay curve before Gamma risk spikes.

We are even introducing a Turbo Exit protocol: if we hit 25% profit in under 48 hours, we take the money and run.

4. The ‘Falling Knife’ Protection

The risk with this more aggressive strategy is catching a falling knife, selling puts on a growth stock that is crashing.

To fix this, I’ve developed a new technical entry protocol. I’m not just blindly selling on red days anymore. I’m using a specific combination of momentum indicators (looking at when selling pressure exhausts itself) to time our entries.

We want to sell the put when the panic is stabilizing, not when it’s accelerating.

The "Anti-Knife" Signal: We don't just sell when the stock is red. We wait for the RSI (bottom panel) to hook back up from oversold territory, confirming stabilization.

5. From the Lab: The New Proprietary Indicator

We discussed using RSI above to time entries. That is the standard textbook approach. But if you know CSP Lab, you know standard isn’t enough for the goals we have in 2026.

Over the last few months, I have logged hundreds of hours of refinement and backtesting to build something better. I needed a tool that filtered out the noise and alerted me only when the probability of a reversal was mathematically significant, essentially, a ‘green light’ for selling puts when everyone else is panic selling.

The result is a custom indicator that is now the backbone of my High-Octane entry system.

The Unexpected Bonus: Long Call-Outs While stress-testing this indicator for put-selling entries, I discovered a massive side benefit: It is incredibly accurate at spotting bottoming formations for long stock positions.

Because the data is too good to ignore, I am expanding the CSP Lab mandate slightly for 2026. Our core focus remains selling premium. However, when my custom indicator flashes a perfect “A+ Setup” for a long stock entry with exceptional reward-to-risk, I will be sharing those call-outs in the newsletter.

Our core focus remains selling premium. However, when my custom indicator flashes a perfect ‘A+ Setup’ for a long stock entry with exceptional reward-to-risk, I will be sharing those call-outs in the newsletter going forward.

Here is a look at the indicator in action:

The indicator catching the exact bottom on INTC.

On this Intel (INTC) chart, notice how the indicator ignored the minor noise but fired a "Wheel Entry" signal right at the capitulation point, catching the exact bottom before the reversal.

A perfect "A+ Setup" on NU - this is the type of long call-out we will start sharing in 2026.

We saw the same behavior on Nu Holdings (NU). The signal identified the exhaustion of selling pressure, providing a low-risk entry for both a Short Put or a Long Stock position.

Capturing the trend: Multiple successful signals on BAC during the recent run-up.

I’ll be blunt—this indicator is simply too powerful to remain free forever. The edge it provides is significant, and eventually, this will likely become a paid-tier exclusive.

But for now, I am keeping it free. If you are a subscriber and have Substack Chat alerts enabled, you will get these signals in real-time as we head into 2026. Enjoy it while it lasts!

The 2026 Outlook

I’m not abandoning the core mechanics of the Wheel, we are still selling 30-45 DTE puts, and we are still managing risk. But we are taking the training wheels off.

I have built a new screener to find these ‘High-Octane’ setups, and I’ll be sharing the first batch of tickers that fit this new criteria next week.

Enjoy the rest of the holiday break. We have work to do in January.

— CSP Lab