How to trade the wheel strategy - The million dollar income option strategy.

STOR ded.. privately acquired..

Hello Dave, I just subscribed! Question, in a bear market like we have now selling puts is not an option (no pun intended! 😁) OR IS IT? What's the opposite of that? And if you own a stock to sell calls you'd STILL be losing! Then what? Thanks much in advance for your answer!

I sold a Put on a stock a few days before earnings, when it's volatility was jacked up high; I got a good premium. After earnings came out, the stock’s price dropped, and my short Put went ITM. Usually when a short put goes ITM you lose money on the trade, but in this case my short put remained profitable because Put prices dropped along with the drop in volatility after earnings. Then I rolled the ITM Put to the next month, and the stock’s price started rising again. That was a double whammy trade!

Stategy

Thanks for providing this great content. Could you explain something that’s a bit of a paradox? Why do you try to avoid getting assigned on the put side of the wheel if you want to own the stock anyway? There is more money to be made on covered call side of things. Wouldn’t you start with an ATM put if you really want the underlying?

Good tooob Dave... well explained and no get rich quick bs.
Regards from Australia.

This is super helpful, thanks for the videos, Dave! I am new to options, so this is probably an obvious answer ... but why don't people just run the wheel strategy by selling a low volatility stock or ETF a couple days out, collect premiums, and it would be very unlikely that the value on the underlying asset could run away from you too much either way?

You are an affiliate for SeekingAlpha. I encourage everybody to sign up for Seeking Alpha. It has made me money in all market conditions. Your discount is a great deal. SA helps when you run the wheel strategy. Tipranks is another site to explore.

I'm gonna start selling options in to eventually replace my income is the plan Any vids words of encouragement for that?

I have done very well on doing the wheel on PCG check it out.

I was hoping you would continue talking about wash sales.

why not sell a put and a call at the same time? the stock can only go one way, up or down

Great video Dave as always. I like the stocks on your list. I've been having pretty good success with AAL (American Airlines) and LMND (Lemonade). I ran into TSN (Tyson Foods) by accident when I was checking out TSM from your list. Could be worth looking at. Added Pfizer to my watch list as well. Thanks

recently my friend had to keep re rolling his put to a future expiration but somehow he was assigned with a week left on expiration. so re rolling doesn't always work.. you will be assigned one way or another..

Is IWM too volatile for the wheel strategy??

Hey Dave I saw that you sell options on O. I have never sold options before but I am close to 100 shares of O is it at risk of getting called because of the monthly dividend?

I really appreciate the strategy you brought up in a different video where you commended selling covered calls in the money a little bit. I'm going to incorporate that as the one part of the wheel strategy that really messes with your brain is when the underlying just dumps real hard below your cost basis and you have to chase it. I like the idea of setting yourself up at the start to mitigating that possibility.

A week before Amazon's earnings, I sold a covered call at $130, my cost basis. Ouch. Talk about missed opportunity and poor timing haha. Felt bad seeing my shares soar in value, but having them locked as collateral because i wanted that $240 premium at the time. Really did think it would go down. Market can be very inconsistent with bad/good reports.

Extremely interested in this topic but have no idea where to start educating myself. Do you mind pointing me in the right direction to begin learning about this? Thanks so much in advance

Dave, as always, thanks for the great videos. You mentioned Wash Sale, and I'd love to see a video dealing with any Wash Sale avoidance tips that you might have, including any trade tracking software that might warn of a potential wash sale. Btw, the Orlando Money Show schedule is out. No presenters from Tastytrade, so I'm going to pass. Hope all your short deltas are shrinking.... Kevin

Spy 20 - 45 days out!

Hmmm i do about 5000 trades a year...i strongly recommend backing up the wheel with longs...look at the volatility of META and TGT...seemingly good companies that you can get slammed with the unpredictable volatility of individual issues

Thank you for the videos! I've been doing the wheel strategy for a while now. Do you have more advance strategies for the wheel? For example, like rolling it out especially if I do not want to get assigned to the put/call?

I love this series so much, man. I can't thank you enough Dave, you rule. I so want to start the "wheel" but I've been concerned about selling Puts right now due to.. you nailed it. Not super confident in the market rally at this time. I don't pick highs and lows but what do when your gut says "just buy more JEPI" if anything?.. sell a put instead and collect $30? I've been very happy with HDV and JEPI this past year. Perhaps I start mid-wheel with what I already have like JPM and CVX and start with a Call to start the wheel? Thoughts?

I think it's interesting that you choose companies with less volatility. I tend to try sell options on more volatile stocks, I'll have to experiment with lower beta stocks in my paper trading account.

I dont know about the wheel strategy in a bear market. You get in trouble real easy without buying put protection. This might reduce your yield. I really can see rally to 50% below from where we are now. So I do this but only buying weekly options. Just dont have tolerance for beyond that right now. Really like the video and your willingness to share your trades. pretty cool

Hi Dave; you are one of the best at explaining options. I'm very new and have 6 or 7 positions (all put options) that expire on Friday - with no chance they'll get put to me with this rally. I am anxious to see where I land with the total premium when they expire. I've been wildly conservative when selling the put option - way out of the money - but this strategy shows how I can get closer to the money and just spin the wheel. Thanks.

What broker do you use? The interface you’re using looks simpler than TD Ameritrades ThinkOrSwim

What are your thoughts on using the wheel strategy with MRVL (Marvel) and SE (Sea Tech). They both have really good premiums, but is that enough?

Thanks for your videos! I did the wheel strategy on QQQ. I profited some ($350) last week. However, now it’s going back up and I’m not sure if selling puts will work. For educational purposes, do you think QQQ is a buy at $330? Or should I keep selling puts till it goes back down if it will ever do? Thanks alot!

Well done Dave. Thank you. I've been selling weeklies, but now will switch to monthlies as suggested by you. Also, I will start selling ATM to maximize income, both Puts and Calls, and take the risk of being exercised or assigned. It's part of the Wheel game anyway. Let's see how the result comes out to be in 6 months.

Glad a stumbled on to your channel. I’ve been selling puts for income awhile now and selling calls when put. My biggest success so far is also a big opportunity cost. Selling puts in MSTR has been very good, lots of premium. I was finally put at 202.50. It tanked. But I sold calls. Rolled up and out. It will get called away at $200. The good news I collected almost 9k in premium. The bad news, I would be up 15k without the call. But it’s a good win.

Wheel strategy rules! It's my main strategy that I use on a weekly basis.

Hi Dave, when do you think would be good time to sell a call on Spy, thanks

Great video Dave thank you!

Hi Dave what is the relative profit difference between selling monthly expiring options versus yearly expiring options as far as premium goes putting assignment risk aside? I know it's different for each stock but what is roughly the average difference. I am trying to figure out whether the hassle of managing monthly positions is worth the extra effort versus a yearly position.

Thank you. Learning so much. Using your spreadsheet.

Hi Dave! I'm with you on curtailing put selling options right now. The market is very over sold and back into over-valued territory. Also, I still have tons of puts still open that I had to roll out just a few months ago. Now many of my call options are ITM and I'm having to roll those out too. This is my first year of trading options and I think the crazy market has certainly been helpful in learning how to sell and manage options.

How are you doing on selling lately?

Been constantly selling calls on CCJ for around 2 1/2 years. The original cost basis is $8.07. ($6,456) I have netted $12.41 in covered call income. 800 shares x $12.41= $9,928. The latest 8 contracts expire on Friday (8/19) at $25.
Today the stock is at 25.45 it would cost .96 to buy back the option. I received $1.47 when I sold the call. I will probably wait until Friday to buy back the position or hopefully, it closes under $25 and expires worthless. Either way, I will sell 8 Sept. 16 contracts. I feel in a no lose situation here. Since I have no cost basis anymore.

Great channel! I discovered the wheel strategy just a month ago, and my first experience is absolutely stunning (with the S&P only going back up 😂). I know, too soon to tell, but this seems awesome.