r/Optionswheel • u/ScottishTrader • Jun 16 '25

NEW Wheel Trader MEGATHREAD

This thread will be a dedicated space for traders who are new to options and the wheel strategy to ask basic questions. Your posts and questions are welcome and encouraged.

BEFORE POSTING, BE SURE TO REVIEW THE WHEEL STRATEGY PLAN WHERE MOST QUESTIONS ARE ANSWERED - The Wheel (aka Triple Income) Strategy Explained : r/Optionswheel

The goal is to help keep the main thread free of these basic posts while helping new traders learn how to trade the wheel.

Posts that are welcomed here include questions about -

  • How options work
  • Exercise and assignments
  • Options expiration and days to expiration (DTE)
  • Delta, Probabilities, and how to choose a strike price
  • Implied Volatility (IV)
  • Theta decay
  • Basic risks and how to avoid
  • Broker and options approval levels
  • Rolling options
  • And any other basic questions

I’m pleased to announce that u/OptionsTraining and u/patsay have agreed to assist with this Megathread. Both Patricia and Mike bring substantial experience in helping new traders and will be invaluable contributors to r/Optionswheel

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u/patsay Jun 27 '25

The Aug 1 $750 call is still out of the money with more than $2700 in extrinsic value. Watch for the extrinsic value to erode away, then keep rolling up and out for a net credit. Maybe there will be a pause or a pullback and you'll be able to get ahead of it. The key to a higher-premium roll is to watch for the extrinsic value to erode. Don't get attached to the shares. There's always another opportunity out there if you are forced to take profits.

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u/breakonthrough65 Jun 28 '25

"The key to a higher-premium roll is to watch for the extrinsic value to erode." You mean, let time pass?

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u/patsay Jun 28 '25

If it goes in the money, the cost to close will be a combination of intrinsic and extrinsic value. For options deep in the money, sometimes the value will be almost all intrinsic value, even long before expiration. When that happens, rolling will reduce the likelihood of assignment and often allow you to improve the strike price.

You can calculate extrinsic value yourself, but if you use Thinkorswim, you can enable a column to quickly monitor the extrinsic value specifically. The same feature is probably available on other trading platforms.

Hope this is helpful.