Trading options without the complexity (or the fees)

Options trading can sound intimidating, but at its core, options are simply contracts that allow investors to have the choice of buying or selling a stock at a specific price by a certain date. Used thoughtfully, trading options can help generate income, improve entry prices, or add flexibility to long-term investing.

If you’re new to options, start with our guide.

Many Canadian investors also use certain options strategies inside registered accounts like TFSAs or RRSPs, which can help simplify taxes and keep more of what you earn invested.

And with Wealthsimple offering $0 commission and $0 options trading, these strategies are more accessible than ever.

Let’s walk through two beginner-friendly strategies and then learn how some investors combine them into a popular approach known as the Wheel.

What is options trading used for?

Options can complement traditional investing by helping you:

• Generate income from stocks you already own

• Get paid while waiting to buy shares at a price you like

• Add flexibility to long-term investment plans

Some investors reinvest the premiums they collect to grow their portfolios more quickly. Others use that income to help offset everyday expenses: covering part of a grocery bill, boosting monthly savings, contributing toward short-term goals, etc.

Registered accounts also typically restrict options trading to defined-risk strategies. That’s why many investors start with covered calls and cash-secured puts.

Covered calls: generating income from stocks you own

A covered call involves selling a call option on shares you already hold.

When you sell a covered call, you collect a premium up front. In exchange, you agree to sell your shares at a specific price (called the strike price) if the stock reaches that level before the option expires.

When investors use covered calls

Covered calls are often used by investors who:

• Already own shares they plan to hold long term

• Would be comfortable selling those shares at a higher price

• Want to generate additional income from their portfolio

For example, imagine you own shares trading at $100. If you’d be happy selling them at $110, you might sell a call option at that strike price. If the stock stays below $110, you keep both your shares and the premium. If it rises above $110, your shares may be sold at that agreed-upon price.

The trade-off is simple: You earn income, but you may give up some upside if the stock rallies significantly.

Cash-secured puts: getting paid while you wait to buy

A cash-secured put involves selling a put option while setting aside enough cash to purchase shares if you’re assigned.

Investors often use this strategy when they want to buy a stock, but only at a lower price.

When investors use cash-secured puts

This strategy can make sense if you:

• Want to own a stock at a specific price

• Are comfortable holding the shares long term

• Want to generate income while waiting for a potential entry point

For example, if a stock trades at $100 but you’d prefer to buy it at $90, you could sell a put option with a $90 strike price. If the stock stays above $90, you keep the premium. If it falls below $90, you may be required to purchase the shares at the price you targeted.

The Wheel strategy: Turning two strategies into a cycle

Some investors combine covered calls and cash-secured puts into a strategy known as the Wheel. The goal is to create a structured cycle of generating income while buying and selling shares over time.

Step 1: Sell a cash-secured put

Step 2: Transition to ownership

Step 3: Sell covered calls

Step 4: Shares are sold and the cycle restarts

Why some investors use the Wheel in registered accounts

Because premiums from both puts and calls stay inside the account, some investors use the Wheel to help build compounding income over time. Those premiums can be reinvested into new investments, additional shares, or future options strategies.

Why trading costs matter

Options strategies often involve selling contracts regularly. That means trading costs can quickly add up — and reduce the income these strategies are designed to generate.

That’s why Wealthsimple’s $0 commission and $0 options trading can make a meaningful difference. Removing trading and contract fees helps investors keep more of the premiums they collect and lowers the cost of implementing multi-step strategies like covered calls, cash-secured puts, and the Wheel.

A few important risks to understand

Options aren’t risk-free. Covered calls limit potential upside if a stock rallies sharply. Cash-secured puts require you to buy shares if prices fall. And the Wheel strategy can carry risk if a stock declines significantly and doesn’t recover.

For those reasons, investors often focus on companies they’re comfortable owning long term, and make sure options strategies align with their goals, risk tolerance, and time horizon.

Ready to try options?

Options trading can be a flexible way to enhance an investing strategy, especially when starting with defined-risk approaches like covered calls and cash-secured puts.

With Wealthsimple’s $0 commission and $0 options trading, it’s easier than ever for Canadian investors to explore options and put their capital to work in new ways.

Happy trading!

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^{Compared with all Canadian order-executions-only investment dealers regulated by CIRO that offer options trading, and trading of stocks, securities and ETF's as of January 20, 2026}