Options wheel strategy

Real money…real trades. So, as you know, I love trading the wheel options trading strategy, and this past week was a roller coaster for this strategy. So in this article, we are going to talk about the Wheel Options Strategy. We will talk about the three reasons why you would possibly lose money with this strategy and also how to avoid these mistakes. So here you see my account. As you know, this show is about real money and real trades, and at the time of this writing, I am still down about eighteen thousand dollars. So it has gotten a little bit better since this morning, but down eighteen thousand dollars.

So the first is panicking. If you are somehow trapped in a position and you say, what the heck do I do now?

• Think Covered Calls on Steroids;
• what does price action mean in forex.
• forex like websites?
• Trading The wheel options strategy – Three reasons why you’d lose money with this strategy?
• Why I Love The Wheel Options Trading Strategy? | Alpha Pursuits.
• The Wheel Option Strategy Example.
• What is the Wheel Strategy?.

But not panicking is so important. This is what one of our members posted in our community. So, now I will go through my positions that I had and then I will show you how I handled them with my plan. If AMD were to stay above So Dropbox needs to stay above So it seemed that we were pretty good there. The finger that hurts. But you have four other fingers that are absolutely fine. So if DBX stays above So the week prior I got assigned because it expired below my strike price. I sold covered calls at the 49 strike price, and I collected premium. So how much premium did I collect for these calls?

So we are OK there, and I still have the shares, because they expired worthless. So if it stays above This is where it goes back to what is the worst thing that you can do?

Like if I were to sell for example. For me personally, I will not worry about it. So here is where it goes back to. What do we do? Follow your plan. But let me just show you one other thing here, which is absolutely important when it is Friday and you are getting assigned like I will be in, right. This is what your reaction should be.

OK, wrong movie, but you get the idea right? Yes, I am. Of course! Take a look at all the stocks.

These are the stocks that I would not mind owning at all, and this is really the number one rule of The Whale Club. Why am I so excited to own it? This is where it goes back to having a plan. So my plan is just to follow The Wheel strategy, and this means that after assignment, I will sell covered calls and collect premium. Very, very easy. This is where we go back to mistake number three, not having the right tools. I use the PowerX Optimizer and I will show you right now how to use it and why it is so important.

So PowerX Optimizer supports two separate strategies. So getting assigned 4, shares at Holy Cannoli, are you getting excited about this?

You get the idea right? Having the right tools help you make the best decisions instead of panicking. There is no single best trading approach.

Factors that affect prices and market behavior will dictate the optimal trading strategy but for purposes of this paper, we'll focus on The Wheel Options Trading Strategy or The Triple Income Strategy. The advantage the trader gets from this play is the premium received which partially offsets the loss. Sell a call option in the stock with a strike higher than the stock's cost basis to create a chance of profitability if the out-of-the-money call option stock goes in-the-money and the stock is assigned. The stock can become a new source of income by selling covered calls multiple times for more premiums which will also lower the cost basis of the stock if they expire worthless.

Maximum profit is only realised if the call option is assigned and the stock is sold. All the premiums should add up to a profit so that all the premiums that were collected from selling both the cash secured puts before the stock was assigned and then all the covered calls before the stock was called away, along with selling the stock eventually for a profit should create Triple Income. The Wheel Options Play could be considered quadruple income if the stock inside the play paid a dividend while you were holding it waiting for the covered call to go in- the-money.

Conclusion Don't forget that the objective of this strategy is to generate returns through accumulating the premium and not to be assigned stock! The unwavering sources of returns generated from using the Wheel Options Trading Strategy could easily exceed returns generated from a buy and hold strategy.

Subscribe to our mailing list

It's important that traders keep track of every trade in order to maximize this strategy. It's also important to note that the strategy does not reflect the true market behavior and that there are other factors that will affect prices. Related Papers. By Oanh Nguyen. By Bruce Martin. By Palios Crinkos. Encyclopedic Dictionary of International Finance and Banking. By Mns Rubel.

By Michael Martin. Download pdf.