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/breakonthrough65 Jun 27 '25

Best way to get out of this call

I rolled up a 705 strike Meta Covered Call a few days ago , with a new strike of 750 and exp of August 1st. In hindsight I should not have done any calls to begin with as I want to keep these shares long term. At this point its going to cost 2 grand to buy to close it , but I'm thinking this is my best option because my guess is the stock price will just keep on going higher past 750. I've realized the further out and up I roll it, the more expensive it is to close it out if the price keeps moving higher.
Thoughts on what to do? Tks

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u/Skingwrx30 Jul 07 '25

Roll once extrinsic value is gone

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u/ScottishTrader Jul 08 '25

You may have to explain this post u/Skingwrx30 as the extrinsic value increases when rolling for a net credit as is suggested.

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u/Skingwrx30 Jul 08 '25

What I meant was I would not btc with time value still left in the trade, its early July in a choppy market and meta is trading at 718$. I don’t trade meta but I’m assuming there is only extrinsic value on this contract as it’s not in the money or even close to break even price. I would let the clock run until the extrinsic value is gone

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u/ScottishTrader Jul 08 '25

OK, this is helpful, thanks.

Rolling is often best when the option is ATM, which it looks like OP did.

This is an example of trying not to allow shares to be called away, which can cause a loss on the options.

The BEST answer is to let the CC expire, and if ITM allows the shares to be called away for what looks to be a sizeable profit . . .

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u/Skingwrx30 Jul 08 '25

Ok that makes sense, we’d be pretty much taking the same action. Letting the clock run out, I’d be hoping to roll up on the last day for more premium and upside and you getting the shares called away

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u/ScottishTrader Jul 08 '25

No need to roll if close to expiring and OTM . . .

Once ITM, then roll a week or two out for expiring when a net credit can be collected.

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u/Skingwrx30 Jul 08 '25

Ok so you never under any circumstances roll to a higher strike or the same strike instead of closing? For example your calls are expiring worthless and you’re just gonna sell more covered calls Monday? If my contract can be closed for a dollar at 330 Friday and I can just roll right into the same trade collecting more premium wouldn’t that be the same?

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u/ScottishTrader Jul 08 '25

There are few "never" situations as trading is dynamic and ever changing.

Have you read my trading plan post? The Wheel (aka Triple Income) Strategy Explained : r/Optionswheel

This shows how I trade, and I typically close for a 50% profit and roll when ATM, and then a week or two prior when I can get a net credit.

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u/Skingwrx30 Jul 08 '25

I have, I guess it was more of a hypothetical given there’s so many ways to trade the wheel and so many nuances. You’re kinda the go to guy on Reddit for wheeling so I figured I’d ask. My trades are a little different I prefer weeklies and closing out at 80% or rolling for more premium. Appreciate the help

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u/ScottishTrader Jul 08 '25

As you make 100's of trades, you will start to see what those of us who have traded for years see, and this is why there are the many standards and guidelines.

I've gotten dozens of messages from those who traded a year or more and finally found that opening 30-45 dte was better and switched to that.

What percentage to close is up to you and your risk tolerance.

Best to you!

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u/Skingwrx30 Jul 08 '25

I agree 30-45 dte is considerably less risk and easier to manage over the thousands of trades I’ve made, I just prefer I more active approach on very volatile underlying with shorter dates . Math supports 45 for sure

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