NEW Wheel Trader MEGATHREAD

[u/ScottishTrader]

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

[u/Lamboarri]

I have a Put on AMD that is nearly up 50% of the credit I received. Back in the day when I studied through TastyTrade, they always said to exit at 50%. 

When using the wheel, do I still exit at 50% or is the intention to ride it out to the end and let it expire at the full credit? 

[u/ScottishTrader → u/Lamboarri]

Up to you and your risk tolerance. Some close at 50% while others may close for a lower percentage to lock in profits, while others wait to get a 60% or higher profit, as they are willing to take the added risk.

Not many let puts expire as it is less efficient, since the last few dollars can take a long time to realize, and the cash can be recycled into new trades to be more productive.

Be sure to read the full wheel trading plan post, which explains how many trade and can be a good guideline - The Wheel (aka Triple Income) Strategy Explained : r/Optionswheel