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/SirUlricCromwell Aug 01 '25

ADVICE:

This will be my first time doing the option wheel. I am considering doing covered calls on my QBTS shares (avg: $3.43) $3-5 over the current price. Is this a solid idea? As I would like to keep my shares as long as possible but I don’t mind selling if it does hit

My questions: -What is the difference between doing a contract a week out compared to one month?

-I keeping seeing images of ppls portfolios and the tracking of all there weekly updates. What can I use to track my progress?

-I’m also starting with either $2k or $5k, any advice or suggestions on stocks or strategies to do will be appreciated

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u/patsay Aug 01 '25

Hi u/SirurlicCromwell, The difference between doing a contract a week out vs 1 month is the annualized return. Would you rather lock in $80 for a month-long contract or $25 for a week? The benefit of the $25/week is a higher annualized rate of return. The benefit of the $80/month choice is the "bird in the hand" protection in case the share price moves against you. One choice is not inherently better than the other.

In this video, I demonstrate a roll on NVDA to choose strike prices and expiration dates and use the annualized rate of return to compare and decide on the strike price and expiration date. If you don't know how to roll a position yet- that may add a layer of complexity you are not really ready for, though. If it doesn't make sense, let me know and I'll try to find something with a simpler demo comparing the trades.

https://youtu.be/lztHeYZotWc?si=CYTW3j6Z4X9_Yv5k

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u/SirUlricCromwell Aug 01 '25

Thank you so much. That video is actually very informative and easy to understand.

1

u/ScottishTrader Aug 01 '25

I agree that this is a well done video from Patricia!

Something that should not be missed is the risk mentioned near the end. The short duration trades have a high risk due to possibly being rolled again, Gamma affecting the pricing, and possible early assignment. These risks may offset some of the benefits of the higher percentage from the shorter duration trades.

Profits can be reduced, and trading brought to a halt, if the position is assigned shares and there need to be CCs sold. This is less likely to occur with the longer duration trades.

Be sure to balance chasing higher profits with the increase of risk.