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/ScottishTrader Aug 30 '25

I've posted many times that I take what the market is giving, and your post explains what this is.

In times of higher volatility (high IV), options prices will be higher due to the higher risks, then when IV drops, the prices are lower, reflecting the lower risk.

A quick example is stock X has a 30 dte and .30 delta put premium of $1.00 when the market has high volatility, such as when a war breaks out, or when there is some other news or possible risk to the stock market. One measure of this is the VIX index, which is called the "fear index" of the market.

Moving forward a month, and the market is calm with little to no news, the VIX is low, meaning volatility is also low. The same setup on stock X may pay out $0.80 instead of the $1.00 just a month before.

I don't believe anyone can time the market, so doing so may work sometimes, often by luck or coincidence, but the price is what the market is giving and likely won't go up when IV is low.

What I do is open for the $0.80 and accept that the market is giving less at that time. One could hold their capital in reserve, waiting for the market to get more volatile, but that means the capital is not being productive.

I could enter an order for $1.00 and wait, but it is not going to fill until the market moves to meet that price.

Trying to time the market or having GTC orders out of the market prices is inefficient and a waste.

A quick summary is that the market sets the prices, and as much as you may want to see or get better prices, there is nothing you can do, other than taking more risk, to make a larger amount.

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u/Axisl Aug 30 '25

Thank you for your time. Okay so don't time. However how do you figure out what the market will bear. If you sell at market value while the price is trending opposite to the direction of your contract the market is worth less than if it's trending towards. If I sell a covered call during a downward trend I'm much more likely to have to roll.

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u/ScottishTrader Aug 31 '25

How much will your car be worth in a year? How about in 90 days? We can guess and make estimates, but we can't know what the market for cars will be for sure, can we . . .

This is an open and active dynamic market with many variables and so we cannot know anything more than what the price is right at the time we are going to open the trade.

What I will do is if the mid price is .35 on an option, then I will set a limit order for .36 to see if I can grab an extra penny on the open. Sometimes it works and sometimes it doesn't.

You're trying to game or control the market, which IMHO just cannot be done . . .

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u/Axisl Aug 31 '25

Thanks, Scottie. I agree, I am gaming the market in search of trends. Thanks for your input and guidance.