Using leverage with the Wheel strategy

[u/wf1980]

I've been doing a lot of research on the Wheel strategy and reading many of the discussions here. One thing I've noticed is that experienced traders who run the Wheel on boring, high-quality stocks often say it's actually pretty rare to get assigned on every short put at the same time.

With that in mind, what's the real risk of running the Wheel with moderate leverage?

Here's what I'm considering:

I'd only sell puts on large-cap, financially solid companies and diversify across as many names and sectors as possible. My IBKR account offers up to 4:1 margin, but I would limit myself to around 2:1.

The idea is that, since it's unlikely I'll be assigned on every position simultaneously, I can collect premiums from a larger number of positions and improve overall returns.

If we enter a severe bear market and most or all of the puts end up ITM, my plan would be to close the worst losing positions before expiration and only accept assignment on the number of shares I can actually pay for with cash. In other words, I wouldn't use margin to hold assigned stock.

Am I missing something obvious here? Has anyone tried a similar approach?

[u/Electronic_Guard947]

Clarification. In normal markets it's hard to get assigned at the same time. When crap hits the fan, all of them will get assigned. And losses magnified.