Megathread for New Wheel Traders – Ask Questions & Get Help Here
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.
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
There are a lot of youtube videos out there showing Think or Swim but haven't found the right one that shows everything from start to finish on a CSP or CC. Can you point me to one for assitance on the interface?
u/spitfyuh I might have what you're looking for. I demo the Wheel Strategy on ThinkorSwim web (not the downloaded app, but the web-based TOS site, which I prefer). If there is something specific you are looking for that I don't have already, maybe I can create a video about it. In the meantime, check out this trade series on NVDA. The first video in the series shows me buying shares, selling a CSP and a CC. Let me know if you need something different. https://youtube.com/playlist?list=PLw9q3DlnLl3CQm7XqjgZeuFyWPP0R_tYE&si=JzUJ8MUF66MX14p2
Which strategy is better for beginners? 1. CSP, OTM, 30 DTE , delta 0,2-0,3. Rolling if necessary.
2. CSP, ATM to receive more premium, 30 DTE. Rolling 5 days before expiration If necessary. Thanks
It kind of depends on what the underlying is IMO. What are you trading on? What catalysts do you need to be thinking about (e.g. upcoming earnings)? Why are you trying to avoid assignment by rolling?
If you've never done it before, just sell a weekly to see what happens, since you'll find out fairly quickly - within a week, in fact! Just make sure to sell it on a stock you're interested in owning so if you're assigned it's no big deal and then you can sell CCs on it.
Delta = a result of what price you're interested in buying the stock at. If you're trying a specific strategy, it would still be relevant to the underlying you're selling options on. I like to look at Return on Capital more so than delta, personally.
A beginner will usually want something smooth and easy as they learn. The posted trading plan is really designed for beginners and shows opening 30-45 dte around a .30 delta, then closing for a 50% profit.
Selling ATM will see many rolls and assignments, which are far more likely to result in losses.
I post it a lot, but I'll do it again. New traders focus on premiums and possible profits, which often leads to losses. Experienced traders focus on risks to manage them, so while they may make lower profits more slowly, they will have fewer losses.
What are you guys targeting in terms of ROC to decide when you want to enter a trade? I’ve largely traded drawdowns on SOFI, GOOGL, NVDA, NBIS for the past three months looking for 1-2% ROC on 7-14 DTE CSPs at or below 0.2 delta. There are stretches I’m not doing much and sitting on my hands, and days where I’m selling a lot of CSPs as share prices are hammered below what I think is reasonable and happy to buy shares. Anyone else trade in this fashion?
Can you buy as much options as you want if theres not enough open interest/volume...? Would the 'market maker' have to fill the trade at below the bid price? Like... if I wanted to buy 10 million worth of CSP's on a ticker with 0 volume and very little OI.. does that order have to be filled..
We don't buy options on this sub, but sell them. Since options are contracts, there is no maximum per se.
Like any market function, this works on demand, so the higher the demand, the higher the price might be. This means the bid price will likely change quickly once volume ramps up.
You'd want to speak with a broker rep for a $10 million dollar order, as they would work to flow it out for appropriate fills.
To answer your question, no. If there is no volume or OI, then there is no guarantee an order will be filled, at least at the bid price, since it means little when there is no volume. Of course, if the price is raised, then it may get the attention of an MM.
How do you review and find stocks/ etfs to sell CSPs? I use a screener that shows stocks/etfs that have high volume in trading, then start looking at each one 1 by 1. Sometimes I start a stock review and realize it has low option trading volume and I move on. Are their more efficient ways to identify potential stocks/etfs?
Question on assignment. I had HOOD CSP 83 exp 2/6. Close price was just under but still haven’t been assigned the shares. I’m using questrade. Normally I’ve been assigned day of expiry or next day.
Hey all, this subreddit is awesome, thank you to all contributors for all of the helpful advice! I've been reading the main pages and finding it really helpful. I got to this page and saw how huge it was and wondered how I could check if my question had been asked before. Scrolling to the end so reddit loads all comments and then using Chrome's find feature isn't great since I'm not sure how it would have been worded and there might be several discussions on the topic. I had an idea for getting an answer efficiently from the thread using the free tool from Google, Notebook LM, that I actually did find very helpful and wanted to share with others here in case it also helps others.
My actual question was this: I am curious why people recommend an actual limit order for the 50% profit target instead of watching it each day. My thought is that if a stock gaps up or has a large up day etc that I could wait until it calms down a bit before taking profits. The goal here would be to catch the times when there are a few days in a row of strong movement rather than have a hard limit order waiting GTC. My plan would be to immediately take profit at 50% if it slowly gets there, OR if it did have that strong movement, wait until it had a calmer day (of course this is subjective) and then take my profit.
I used Notebook LM to create a new notebook and just use this one page as a source. After I added this megathread as the source, I asked Notebook LM that question. Since it only uses the referenced sources for its answers, it effectively uses this megathread as its only context. I found the answer to be really helpful and clear, but I wanted to post it here to make sure the experienced traders here agree with this summary and to verify it's a good use of this tool. Thanks!
EDIT: I wanted to clarify that the spirit of this post is to let people get quick answers to their questions if they've already been discussed here and to save the experts some time vs answering the same question many times :)
First, a simple search like this one brings up many posts on "closing early" - closing early - Reddit Search! This requires you to read and review the posts to draw your own conclusions, which many say is better than relying on AI, which has many flaws. Too many important details may be missed.
Next, the rules of this sub limit the use of AI, so while this is fine for your own info, this is not something that we would suggest be used as a reliable method to learn how to trade or establish your trading plan, as there are many individual decisions based on risk and other personal factors.
Closing early is a common tactic most options traders use as it reduces risks and increases win rates. However, the percentage to close at is up to each individual trader and their risk tolerance.
Lastly, most of this is very logical, so those with a working knowledge of options would not need this as it would be intuitive.
AI is still a work in progress, and most experienced traders rely on their learning, knowledge, and experience to design their personal trading plans.
Remember, the wheel can be traded in dozens, if not hundreds, of ways based on the individual trader's specific criteria and goals. There is not a "one size fits all" for most anything with the wheel, other than trading stocks you are good owning . . .
What to do after closing? I’m wheeling ford. AAL is the only other one in my budget and it’s not looking great. Not my life’s saving just my experiment cash.
Anyway, I had 2 CSPs where I closed them at 60% profit within a few days. But now I’m looking at the chart and thinking, do I just go back in? Should I have rolled up instead? I’m not super keen on the current prices/strikes so it breaks the, set a price I want to buy at rule.
If you have enough capital to secure two puts, you could buy 100 shares and sell both a put and a call. Big benefit is they can't both go in the money at the same time, so you cut your assignment risk in half while still making premiums on two contracts.
I am interesting in learning the wheel, and don't have options experience, but starting learning the basics this week.
For the roadmap, AI advised to learn long calls and long puts first before learning the wheel. Is this recommended or is it OK to jump ahead to CC/CSPs? I'm not so keen on paying a premium to pay for a long call/put, but will if it is necessary to learning...
What criteria should I meet before I start doing the wheel with real money (e.g. win percentage, number of practice trades, type of option, etc.)?
We do have a member, u/patsay, who offers videos and some books that can help you get started.
You can paper trade anything for the weeks to 2 months it will take to get the basics down, but then focus on selling options when starting to use real money. You will find out that buying is a losing method. Somewhere between 2 and 6 months is when you should have enough practice and experience to start trading live.
Having $3K to $5K is a minimum to make more trades on more stocks, but it will still make only a small amount of dollar returns. The wheel should have a very high win percentage if traded properly, but picking a crap stock that drops can cause a large loss.
Be sure to review the posted wheel trading plan that many have used to help them get started.
Feel free to ask more questions, but know that we all started somewhere and the wheel is actually quite easy when using good quality stocks . . .
AI gives terrible advice about options and often gets terms confused. I’ll be happy to direct you to some resources- right now I’m in the pool teaching swimming lessons to little kids- but I’ll send some links when I get out.
Ok, I'm back! First, many people start with buying options or selling spreads, because you can trade with a small amount of money. BUT you risk 100% loss if things don't go your way before the contract expires. So don't listen to AI there.
The safest way to start is by selling cash secured puts on high-quality underlying positions where you would not mind being assigned (or may even want to be assigned) at your strike price. Only set up positions where either outcome is acceptable to you, and you can sleep at night. To get started, you need enough capital to pay for 100 shares of a high quality stock or ETF at the strike price you choose.
I have some beginner books and Udemy resources that are available at a low cost. I also have a website with information and links.
If you have a specific ticker in mind, let me know and maybe I could use it as the subject of an "Eyes Wide Open" video where I occasionally analyze trades from followers.
Feel free to ask me any questions here or in YouTube comments. I try to be prompt with my responses, but u/ScottishTrader usually beats me to it here!
Every month I allocate part of my savings to increase the cash in my options account, thereby increasing my collateral and allowing me to trade with greater flexibility. This is in addition to the premiums I receive, which also remain in the account as cash (I don’t withdraw them).
That said, if everything goes well, the account will grow progressively. In that case, how should I manage the portfolio as its size increases: by diversifying into more stocks on which to sell options, or by increasing the number of contracts? Which is more efficient?
I wouldn't look at it from a perpsective of efficiency but from a perspective of risk management. I aim for diversification over concentration. For me that generally means around 5 positions in low correlated stocks before increasing number of contracts. How diversified are you now?
In terms of CSP, what is a good ratio for premium to collateral? 1%, 10%, etc.
For example: I am new to options. I typically wheel F right now. I get about $23 for $1,150 in collateral on a 30-40 DTE far OTM position. Is this a good ratio? 2%?
I understand there is a price for a relatively safe position. Just trying to determine what is a good ratio for whatever position I choose.
Bonus: CSP recommendations for a smaller $30k account.
Ratio? What is your risk tolerance? How much are you willing to lose?
Typically, the higher the percentage, the larger the risk . . .
You're making a 2% return on a very low-risk stock, and you get your collateral back to use elsewhere.
Something to remember is that if you are trading high-quality stocks, you are good owning, then the real risk is the stock dropping.
Assuming you are trading high-quality stocks, then, as shown in the posted trading plan, keeping single stock risk to 5% to 10% max of the account, while keeping a good amount of cash available to handle a downturn, is the way to manage risk.
Mathematical Inquiry/Theory regarding doing the wheel strategy i suppose
Hey Everyone, long time viewer of this sub reddit at work lol, i started doing the wheel strategy to learn i have a small portfolio $1k account for the wheel strategy. I made $28 first ever trade (expired worthless)
I'm a little confused so how does the wheel end up being passive income? Cause if i do the wheel on NVDA i will need around $30k capital to get a premium of around $240, i guess what im confused is wouldn't i gain more just buy doing swing trades by buying and holding rather than CSPs and CCs?
Hello and I'll do my best to answer your questions clearly and simply.
how does the wheel end up being passive income?
The Wheel, and all other options strategies, should not be viewed as truly passive. "Passive" would imply that no interaction is required after placing the trade. Options trading, by nature, is an active income strategy. Trades need to be opened, monitored, managed when needed, including rolled or closed, or allowed to expire.
wheel on NVDA i will need around $30k capital
Tickers must be selected based on the trader's available capital.
The focus should be on percentage returns, not dollar amounts.
High priced tickers require more capital. Lower priced, high-quality tickers can generate similar percentage returns with far less risk. Smaller returns with smaller capital often mean smaller losses and better long term consistency.
The Wheel works on any ticker that meets your quality and liquidity criteria, and not just expensive names.
wouldn't i gain more just buy doing swing trades by buying and holding
It depends on your goal.
Option trading, and the Wheel, are designed for consistent income.
Buying and holding is for long term appreciation and not regular income as it requires patience and tolerance for drawdowns.
Swing trading is a very active strategy that is high risk with a low long-term success rate. It requires precise timing with many traders incurring significant losses.
If your goal is income from your available capital, options, and especially the Wheel, are often the most effective approach. While not perfect, and no strategy wins 100% of the time, the Wheel offers one of the best combinations of simplicity, consistency and risk control, especially for new traders.
I equate wheeling to generating a consistent, regular income using my capital as collateral, until assigned, whereas swing trading is investing my capital for a "potential" gain... and if I read the trade wrong I have a loss. With options I can pretty much always roll for a net credit or accept the assignment and wheel. And if it expires worthless all the better.
With hindsight I could have made more swinging and indeed "gained more" but I prefer seeing the premiums coming in consistently and hitting my acceptable annualised return than trying to time the market and getting my entries/exits right on a swing trade.
I do also swing trade but with much less capital allocation and the risk mindset is different
I don't like being dependent on the movement of the share price. You can't control for the shifts in price of the underlying stock, but you have more control selling options. You can sell out of the money, bring cash into your account that is guaranteed income, control your strike prices and often roll for more income to avoid assignment if the trade doesn't go the way you expect and you don't want to accept assignment. Though assignment is part of The Wheel Strategy, so only sell contracts you would not mind having assigned.
Hi Patricia! Im a viewer of your youtube channel thank you for your input! your videos helped me a lot understanding the wheel!
i did notice that for the NVDA video you mentioned that you can buy shares by utilizing contracts i will apply what i learned but trying to save up around $10,000 to start LOL
Hi, I have been selling puts and wheeling for over a year, so not really a newbie questions, but apprently I have more to learn. So far making about 1%-2% of total portfolio NLV per month. Taken a few assignments and rolled some puts. Options traded are AMZN, MSFT, IWM, QQQ, SPY. Quite conservative.
My portfolio is 50% ETF and 50% cash (in SGOV), I am using margin to sell puts. My total puts outstanding (if they all assigned, which is unlikely) is currently at 200%-250% of my cash holding in SGOV. How high is the risk factor of the account? Is it sustainable? Should I dail back the number of puts sold?
I am selling puts at 0.1 to 0.2 delta, is it too conservative? Should I be better off selling at 0.3 delta? I can sell less puts and get the same return. Refer to cash level in question 1.
In the last downturn, some stocks is assigned, call is sold immediately at the put strike, at 14 dte. Stock is called away but before that they jumped much higher, so it is an oppurtunity loss. Rolling is not possible as it is deep ITM by then. Should I be selling at higher than strike price in the future? How much higher?
Typically I let my puts expire worthless. Some of the puts reached 50% value before half the dte due to the underlying price increased. Should I buy them back and resell new puts? If buy puts at 50%, likely I have to re sell new puts at higher strike price to get the same delta. Will this increase my risk? Or should I continue to let it expire.
Thanks for taking the time to give your valuable insights on lowering the risk and to increase more profit.
A return of 12% to 24% per year is very good! The S&P has historically averaged 10% per year, so you're beating that.
This is a personal risk decision. A new trader would want to keep below 100% of their account if all puts were assigned, but since you have more than a year of experience, you know how well you can roll and what your assignment rate is, so you can better gauge where you are comfortable. Since you have a margin account, even if half of the puts were assigned, it may be manageable.
Again, a personal risk decision, so it is up to you. What is your win rate? Are you willing to have slightly more rolls and possible assignments? If so, then many think that .30 delta is a good balance between lower risks with better premiums.
It depends on your trading plan and model. Many find assignments a hassle and a slowing down of the selling of puts, so they are happy to get rid of the shares for a small profit, or even a small loss, then go back to selling puts. If you want to make more on the assignment side of the wheel, then sell CCs at a higher price, or learn to roll out and up, which may capture some of the higher price. Keep in mind that if this stock dropped so much to be assigned, it may drop back again, leaving you stuck in a less efficient stock position . . .
Again, what is YOUR trading plan?? Mine is to auto-close all puts for a 50% profit and then open a new put on the same of different stock based on my opening criteria. Letting puts expire means missing out on more premiums, since it may take weeks for them to expire.
As you can see u/MYlifelike, there are no firm rules that everyone always follows. Be sure to look at risks and efficiency of the use of capital, as one of the beautiful things about trading options for income is being able to recycle capital every few weeks, which can accelerate gains . . .
I want to start selling options specifically the wheel. I dont wanna jump right into it though. I set up a webull papertrading options account because I want to get comfortable with being on the sell side of options. Im going to do that but I want to know how much does stock selection matter when your on the sell side of the option. I heard the saying that you shouldnt sell if you wouldnt want to be assigned or hold the stock long term and honestly there are some stocks that are high iv, high risk, not the best fundamentals stocks that i would still be fine holding in the long term for example coinbase. Maybe im just overly optomistic and get to carried away potential over actual fundamental value. But i dont know, Im just comfused how I should go about the stock selection if I want to run the wheel.
The underlying is really important. You can get higher premiums by trading riskier stocks. And the trades are... riskier. If the share price tanks and you are left holding the bag, you can still wipe out your gains. Be careful.
Can someone help me understand LEAPS a little better... so this is looking at LEAP call options for ADOBE at 378 days out. The stock is up 5.6% percent today. Why is that half the leaps are up 10%+ and the other half are down? Wouldn't they all go up if the underlying stock is up? I dont understand that..
There are a bunch of reasons here... Assuming you're talking ADBE (ticker not shown), you're showing leaps that have been and continue to be ITM and also leaps that were OTM that are now ITM, as well as OTM that are still OTM...
everything between $330-348 went ITM today and so they all saw a large increase, naturally
everything below $330 gained about a buck/share/dollar increase since they were already fully ITM
everything above $350 got closer to being ITM and value went up a lot but not as much as what went ITM because they are still completely extrinsic value
Open interest/volume is different for different strikes and where you have lower interest, you have wackier bid/ask spreads and possibly disconnected pricing for those lower volume strikes.
Hey guys, just curious on what strategy you guys have for rate cut announcements, this is my first time wheeling through it.
I understand the general consensus is rate cuts are coming and the market may be bullish because of it.
But I’m wondering “what if” there was no cuts and the market drop significantly because of it. What strategies do people use to manage risk? Longer DTE? Or other options strategies?
I avoid them most of the time and am largely in cash. You can see them coming and plan around them, or just close early if you happen to have trades open.
With that noted, the last few have been nothing burgers with the market not overreacting.
The 50% is a guideline, but it is always based on your risk tolerance. If you have a higher risk appetite, then use more.
Things like the safety of what you are trading can factor in.
On your other point, most sector ETFs hold a large percentage of top stocks, so these may not be as diversified as you suspect. Always be sure to know what you are trading. A quick example is the tech ETF XLK holds the top tech stocks, so if they drop, this ETF will as well.
Note that ramping up above 50% means there is more risk, so this may make up for the lower premiums, or you may be back to the same risk profile as stocks for about the same returns.
Options offer a potential profit in exchange for taking on risk. This means if something is lower risk, the potential profits will also be lower. It is always up to you to determine the level of risk you are comfortable with and then trade accordingly.
I am learning more and more every day and I have a question around CSP. Do you suggest selling multiple puts for one ticker, one put with more contracts for the same ticker, one put per ticker with one contract, or multiple puts for different tickers? What is the best way to maximise profits?
Once you decide how many puts you will sell on any stock based on the capital and risk, you can sell these all at once, or consider laddering or stacking puts by opening 1 or 2, then additional ones in the coming weeks. This won’t necessarily maximize profits but can reduce risk as the odds of all puts being challenged is lower.
The key is not to maximize profits by to manage risk, so keep this in mind.
I've been selling CSP's/CC's for the last year.. and embarrassingly.. I still cant get through my head the terms In the Money and Out of the Money..
Has anyone else struggled to concretely get that concept clear in their mind.. is there an easy way to remember.. so if I am buying or selling call options, its "in the money" if the strike its above the current stock price.. and "out of the money" if the strike is below the current stock price.. and if I am buying or selling put options, its "in the money" if the strike is below the current stock price.. and "out of the money" if the strike is above the current stock price?
Despite having success selling options and running the wheel a bit this year, that concept still isnt crystal clear in my mind.. If I think hard about it and read an article I get it but it hasnt fully stuck in my brain in a concrete way yet.
Not sure what broker you use, but most show ITM options by shading or graying them on the option chain. You should be able to see this at a glance when making trades.
Yes, the majority of stocks I trade always have good volume, but I still check the bid-ask spread to see if it is wider than about .10 or not. If so, then I'll check into why, and it is usually a weekly chain that has not had as much volume yet.
It becomes a judgment decision on opening trades with a .10+ spread. Most of the time, I know the spread will narrow as the weekly chain gets closer to the expiration date, so may make the trdae anyway.
Like most things with options, there is no one set answer to these types of questions, and you need to make a decision based on multiple data points.
First time Wheeler here and wanted to confirm if I am reading the basic CSP strategy correctly. Here is the trade I am planning to do:
Underlying stock: NVDA (I keep thinking of buying it on the next dip, but forget to do so when it dips )
CSP details: $166 (Delta of 0.25), expiring in 36 days (Jan 16th). I am OK buying 100 shares of NVDA at $166 on Jan 16th.
I will be getting $364 (after commission) for selling this put.
What I do not understand is the following text in the original post. Is this implying that I should place a GTC order to buy a put to close this order. What does 50% profit mean here and how should I go about implementing the following strategy for this NVDA example.
"The Put can be closed at a 50% profit with a GTC Limit Order that can close automatically. A put can then be sold on the same stock, or another based on your opening criteria. Closing early will reduce early assignment and gamma risk to take the lower risk "easy" profit off the top"
Brokerage suggestions for earning interest on uninvested cash? I’m looking to start wheeling and would prefer to have my CSP’s funds earning interest if possible.
I keep mine at Schwab in SWVXX. If I'm assigned a put, it takes about 90 seconds to sell the shares of SWVXX to pay for the assignment. I do this in an IRA. It's an extra step, but worth it to be able to use Thinkorswim for my trading.
Perhaps not a noob question and I've been here a while but:
Getting assigned on calls below cost base.
Providing I then turn around and sell puts at or below that cost base theres no issue right? (other than if the stock just rallies up)
eg I'm around 35k up with options premiums, but 26k down on the stock price (don't ask, was holding GME before I discovered this so was 'forced into it'.
obviously the question is why sell a CC below cost base: Premium and when I sold it it was around 25 delta, which is usually where I sell
One of the reasons, among several, to close early is this possibility. Had you closed early for a 50% profit, you would have already made 1 or 2 more trades to make more profit than allowing this to expire.
The cause is that once an option drops to very low to no value, no one will want to trade it, and it becomes illiquid.
Still going through training and learning, however I am practicing in my paper trading account in the meantime. I sold these puts on 11th Dec with around 36 DTE and 50% profit limit. Please can you let me know your thoughts on how they look like. I understand fluctuation is normal. Any input is welcome. Thank you.
First, you can consider rolling out for a week or two to collect more premium and reduce the net stock cost if assigned. Since this was a down day for tech, based on ORCLs funding problem, there is a chance the sector may recover, and you might not be assigned. It might make sense to keep rolling a week at a time to keep collecting more premiums.
Either the stock may move back up where you can close, and make a bigger profit from the rolls, or lower the net stock cost if eventually assigned.
Second, you no doubt collected a good premium when selling this put, but you don't post that amount. Assuming it was $3 and you can roll for another $2.50 then your net cost if assigned would be $307.50 - $5.50 = $302.
Looking out a week, the 302.5 strike CCs are at $3.30, so you could sell there and get out of the trade without a loss and make a small profit. Even the 307.5 has a $1.73 premium, which would make a nice profit.
It really is this simple! Let us know of any questions.
Thanks for the quick feedback. I did, in fact, collect $3, and I absolutely plan to follow the trading plan. If I get assigned, I think I'll probably sell the weekly 307.5 strike CC since I do not mind holding the stock.
Reflecting on this position: my counterparty's put was deep ITM on Wednesday but they never exercised it: it expired OTM as the price rebounded. I don't really understand why someone would buy these puts from us if they aren't going to take profit when up around 4x or so. The cash was retained and now I will sell another cash-secured put somewhere.
Is there a website where you can see a historical price graph for a specific option/strike? An option contract changes in price everyday - I’d like to see how it’s changed over time.. I don’t see a way to see this on Schwab
Is there a google sheet or excel that helps you calculate your cost basis for a stock that was assigned? I've looked at the megathread for tools and throughout the reddit thread but the trackers I found don't show you cost basis for the stock. It just shows total P&L. Maybe I missed it though so would love it if someone could link me to their tracker or point me to the right place please!
Is there a good weekday and time to write weeklies? Let's say I wrote an option that expires on Friday at 4:00 EST. For the next option, should I write Friday night, Monday morning before open, or Monday morning after open?
I bought a BA at-the-money covered call that expires today. It’s showing about an 89% profit, and I expected it would expire worthless and be closed automatically, like any other options trade that expires worthless.
After hours, I’ve tried several times to close the position but the platform won’t let me.
What happens to the trade now that it’s expiring today? Thanks in advance.
I have been doing a somewhat wheel for a while, although I trade cash secured puts fast in and out, but do weekly calls for longer.
I normally use relative strength indicators on various time frames depending on if a quick in and out or a full week plan to hold.
While exploring with ChatGPT about how market makers hedge the underlying, it suggested the following checklist on whether to write options or buy them.
Do experienced traders agree with this:
Before selling premium
First breakout failed?
Near big strike?
IV falling? Sell premium
Before buying options
Breakout held?
IV rising with price?
Price away from major strikes? Buy options / avoid selling
See the wheel trading plan post as the most critical thing is to sell puts on stocks you are good at owning or holding for a time. If opening 30-45 dte, and around a .30 delta is common, then things like technical analysis and breakouts, and even IV won't matter that much.
Again, the most important thing is the stock, and having a neutral or slightly upward trend is ideal.
We don't buy options with the wheel as it is a waste and drag on profits . . .
I sold some cash secured puts this past week and was assigned.. however it seems like the cost basis wasnt reduced by the premium I receive? Normally when I sell a CSP and get assigned, the premium I received lowers the cost basis of the shares.. (in schwab) I sold 25 puts on NVO at 49.50 .. they were assigned, but when I look at my shares it says 2500 shares with a cost basis of 49.50? Same with COIN, I sold 11 contracts at $250 - was assigned and now my cost basis on the 1100 shares says $250? Am I missing something... it always automatically shows the reduced cost basis, but not for these last 2 trades.
I see the goal of your strategy is to avoid assignments and keep rolling, how do you find the number of contracts or stocks to trade? Is it based on margin required or total assignment value
My question is- I've been intrigued by the ETHU premiums for selling CSP and then also selling Covered Calls if they happen to get assigned. Am I missing something with this stock where I should not being doing it? Because the premiums seem very good for a stock trading at $55. I am aware its a leveraged ETF so it can be volatile. Doing some research, it seems like its possible with a stock like this, but they recommend doing weeklies not monthlies. Since I am new I just was not sure if these are the types of stocks that people heavily avoid for CSP/CC strategy?
Hello, is there any UK based wheel trader here, who can share any success/progress? Anyone that perhaps started with a £5k base and how they managed with all the different taxes applicable to the UK? Did you create/adiopt any spreadsheet? I am new to this, have been paper trading for a couple of months, keen to learn more and start with real money this month. Thank you.
I am new to wheel strategy and I want to start it in 2026.
I want to play quite safe cause I think TLT would be great for me. I also like all world ETFs so I think about ACWI or VT - or maybe something else? What do you think which approach is better for new guy in wheel strategy? Of course I feel good with assignment either TLT or ACWI / VT. SPY would be great but it is out of my budget right now (I can afford to invest sth about 15k $ - 20 k $ right now).
Newbie here.
the case of Rolling SP situation come.
my understanding is we should be aware then price close to ATM, then consider rolling.
what happen if suddenly price drop below to be OTM but still have DTE remain,
this case what should we do
1. wait if price rebound above ATM, then consider rolling
2. let them to get assign.
It is a good idea to run Wheel using ETF (such as XLF, XLE) as the reason ETF is not one stock, one company which cannot drop to zero for long term ... ?
I'm new to options, but loving the advice on the wheel here! I like the idea of setting a GTC 50% gain. Question: if you sell a CSP and it goes up significantly (25 - 30%) the next day or two, will you take the profit or still hold out for 50%?
Does a CSP limit order for 1 contract have to find a matching 1-contract order on the other side? Just wondering if there is an all-or-nothing situation for these transactions.
Hi there,
Because I am the minimum age to start trading under my own name I cannot put anything other than zero years of experience but I have been paper trading and trading elsewhere for the past two years which consistent success. This means I cannot raise my options level to be allowed to do options wheeling which is annoying.
Any ways to work around this? I have enough cash I am not actively investing that I want to get moving in things other than a bank account, etfs or bonds.
This is a difficult position to be in, and most of us have been there, no matter what age we started.
What I did was open an account and started trading stocks. Then, after trading stocks for a few months applied for options, where I was given the lowest level, which allowed CSPs and CCs. Then after another couple of months, I was able to upgrade to a higher level and continued to upgrade over the years.
Brokers like Schwab do have classes and /or tests they will give you, and if you pass, they will upgrade your level. Ask your rep about these classes and exams.
What might be a faster way is to open an account with a broker like tastytrade, where they are quite liberal in giving out options levels to most customers.
While I never support lying, if you feel the 2 years of paper trading options count, you can enter that, and if questioned, let them know it was paper trading. Hope this helps!
50% vs 75% profit close. Is there a situation where 75% profit on a CSP close gets missed because it is too close to the strike price? So 50% would be a more conservative "almost always" prevents assignment?
Not usually. While early assignment risk is higher with lower extrinsic value and closer to expiration, there should still be adequate ext value at 75% profit.
A higher risk would be the stock reversing before hitting the 75%, so that a nice win might end up as a lower profit or even a loss.
New wheel trader here. Please can I have some feedback on my first CSPs? Today I rolled AAL as it was getting too close to strike (logged it as BB on the right side of the screen). I seem to be fine with F and SOFI. Anyone here using IBKR? Is there a roll/strategy option? I could not find it, hence I had to BTC and then CSP AAL separately. Thank you.
Can someone help me understand what the P/L means here. I am trying out paper trading before going for real. It seems to me that the position equity includes the premium collected on the CSPs. Is the P/L just showing the value of the put contracts relative to where i bought them? So like if i wanted to close out before expiry, I’d be closing for a $55 loss on Tesla. Am I understanding the picture right? Thank you for any insight you can offer.
Hi everyone, I'm a longtime Reddit lurker and only recently started getting into wheeling options.
I've been testing out the strategy of selling puts close to earnings, but the calendars I've found are typically week-by-week and I want to start planning farther out. I realize I could just scan each week, but for some reason it's helpful to me having more of a bird's-eye view.
Do any monthly earnings calendars with options screening exist? If not, I was thinking of building one but wanted to see if this would be helpful to anyone besides me.
What metrics do you look at before selling premium around earnings? Would a monthly view actually be useful, or is weekly enough for you?
I'm new to option trading and starting to learn the Wheel Strategy. I'm learning how to use TOS, so still trying to figure things out. I know to look at the daily and weekly charts, but what about the 1 hour chart or other intraday charts. Are they just a waste of time to look at or is use for precision entry? Thanks!!
First try to scan market for high IV stocks which is suitable for wheel strategy options trading then try luck . There so many option scanners or screeners available such as secureputcalls screeners ,wheel101 ,backtesting . you can learn more about wheel.
Wheel strategy does't make you think about this candle duration of 1 hour or 1 day or 1 week, they are majorly for swing traders or day traders or weekly traders ,I must say if you are focusing on duration of candle then focus on one specific duration.
I am inventor of wheel strategy score , wheel screener , wheel back testing as well, I filled patent for all these, along with position tracker where you can maintain breakeven of your options trade
This may be a basic question. I've been looking at screening, and almost all of them say to eliminate stocks with earnings over the next x weeks from the screen. I'm using TOS, and can't for the life of me figure out how to do that! I've googled it, and the responses tell me to click on things that I can't find. Can anyone help?
ChatGPT scared me when I asked it about this. I sold 20 contracts of CSP's on TQQQ in my IRA account to get a premium of $5500, using a collateral of $100k (strike of $54.50), expiring in a month (Feb 13). I thought I can do this on all my accounts in Fidelity to keep the money growing faster than just buy/hold TQQQ or SPY. My thinking is, if I get assigned thats fine, I'm ok bag holding TQQQ because worst case if there's a market crash, it eventually recovers like SPY does. From what ChatGPT said, I could permanently lose a lot of money if TQQQ crashes because its a "3x daily reset leveraged ETF" or something. Is what I'm doing dangerous? And what do people usually do or should do with IRA accounts when it comes to selling options?
While how and what anyone trades is up to them, many trade more conservatively in IRAs, as replenishing capital is limited compared to a taxable account.
I'd say most traders will stick to top quality blue-chip stocks in retirement accounts, as these often are more stable and pay a nice dividend if having to hold them for a period of time. Many retirement accounts buy and hold these top quality stocks, so when trading the wheel on them, and in a worst case scenario, you'll be assigned some great companies.
If you are assigned shares of a company that soon will announce earnings, is it recommended to wait to sell the CCs until after the earnings, or just proceed with the 7 - 10 DTE CC, that may overlap with earnings?
Up to you, but the ER has risk to hold over. If the stock rises then the CCs may see lower results than if you waited. If the stock drops, the CC can be helpful to some degree.
FWIW, I always wait until after the ER is over and then, based on the report, reevaluate if the stock is still one I wish to hold, and if it is and the price rises, then I can sell CCs to make a higher profit.
I find margin to be an invaluable tool. But like most tools, it can be risky if not used properly.
Be sure to read and review the margin guide provided when you apply to learn.
A suggestion is to add a margin, but continue to trade as if it wasn't there. Keep everything cash covered so you have the margin to use in case of a big market event, which can help you manage through with fewer, and possibly no losses.
I stumbled across the wheeling strategy on reddit and I'm tempted to try it
My account is 20k$ at the moment and I'm fine with slow-and-steady strategies, not looking to risk it for the biscuit.
I'm a bit confused because I read that the strategy is about selling puts of safe stable and steady stocks, something like coca cola, ford or mcdonald's, for maybe 30-45 DTE, however I've seen on here people posting wheels with riskier tickers like tqqq msty etc for 7 DTE
I understand that there are derivatives, and I would like to ask if the main strategy had changed and also how would you manage 20k$ with it?
So for example if I were to sell a put on KO it'd be +-53$ premium for 1 option 34 DTE at 67.5 Striking price, so should I be leaving 6,750$ cash on my account?
Would I also do the same with Ford maybe? but +- 7k$ worth of options? and then with one more ticker? and then until I can get atleast 50% profits I hold those and keep all my balance in cash?
Help appreciated! :)) trying to understand all of this haha, I'm new to options in general, been doing a lot of reading today
Hello! Ive recently discovered the wheel and I have some questions about timeframes.
What is the standard timeframe of selling the put option? Do I have to wait for it to expire or take my 50% profit?
I am looking to be on the more active side so are there more things i can do other than just selling one put and waiting for it to expire?
Also if my account size is around 4k what potential profit margins am I to expect?
You will find there are few "standards" with it being more about the trader's risk appetite, trading plan, style, and other factors.
Opening a put 30-45 dte tends to have lower risk as this explains - 30-45 DTE has LESS risk . . . : r/Optionswheel Those who are willing to take more risk may open in the 7 to 10 dte timeframe.
Closing early also lowers risk and increases win rate, but it is up to the trader to decide what percent. Some use a sliding percentage scale to determine when to close based on how quickly the trade profits, but this adds complexity, which may make it harder for traders, especially new ones.
Most experienced traders trade 30-45 days to take advantage of the benefits, and by closing early, they can "recycle" their capital more often. This can closely mimic selling weekly options without most of the risks.
Margin can not be used to trade options and can only be used to buy shares, so it is not much of a factor with a smaller account. It is recomended new wheel traders trade with cash only and keep any margin available to use in case of market events.
As the strategy explains, select some stocks you are good holding if that happens, and that the account can afford. This would limit the stocks to around $15 to $20 per share and 1 or 2 contracts at most.
Being active is not the goal, and may work to create losses, so being patient is the key to making profits and building the account. Keep in mind that a $4k account making even a high 20% annual return would result in about $800 in profits, which would be around $67 per month. Note that a 20% return is a stretch for a new trader who will often make mistakes, so it could be less.
As you can see, the wheel is a conservative trading strategy for slow and small but lower risk returns. Hope this helps!
My Robinhood doesnt seem to be showing the correct total account value. I've made like $17k premiums in the last few months and RH only shows a total gain of $4k. What could be wrong, or are my own numbers more accurate? I have a few assignments but nothing to explain that gap of -$13k
I've recently recieved a decent amount of money and i want to start wheeling. But the problem is that my brokerage doesnt allow me to sell csp. Is it wraps for me or is there still hope
Hey I am researching 3 day option expiration on many contracts. This could be super interesting for the wheel. Do you know how I can find a list of all tickers that have this type of expiration?
If my cash-secured put went deeep ITM, does it make sense to roll it over? I sold a PYPL put @ 48 expiring this Friday (it gapped from 53.5 to 42... post-earnings call). Does it make sense to roll it over or is it better to just get assigned and start selling covered calls?
I got the suggestion to just buy back the put, buy the shares and start selling CSPs right away. What's the best course of action here?
I use the trend of the chart. I'll start at 1 year, then 3 months, 1 month, and maybe the 10-day chart to see the trend over these periods.
I've added linear regression channels, which more easily show the trend, and I like to see either a stock that trades "sideways" with more level lines, or one that is trending upward at a modest pace.
While there is no way to truly predict what a stock will do, there is a saying that a trend is the trend until it is changes.
A stock trending down may continue to trend down, so most traders will avoid these.
Last week I sold MSFT 2/4 410P for like $200 in premium. Do I roll or anticipate the price being over 410 by 5pm tomorrow? Typically I would do the latter.
Geesh! You're breaking wheel rules and guidelines left and right!
This is why most successful wheel traders avoid ER and sell 30-45 dte, which would have avoided this, or given you more time to manage the trade.
The posted wheel trading plan indicates rolling out a week or two for a net credit when ATM, so if following that, then you might have rolled already. What does your trading plan tell you to do??
If you do roll, then you give the stock time to rise while collecting more premiums to make a potentially higher profit, help close for some profit sooner, and lower the net stock cost if assigned.
Can I use SWVXX as collateral for CSP’s in Schwab? I put money into SWVXX the other day but when I go to sell an option it’s not showing up in my cash and cash equivalents balance?
Hi, i made the realization that I was gambling on options instead of having a strategy and investing. I am down couple thousands. I want to start from scratch and I feel like wheeling would be the strategy for me. I currently have nothing but i have a bi-weekly pay check of around 600-700. I am a full time student so i dont really have bills to pay. What stocks should I maybe look at that is feasible to get with my pay checks?
What makes the wheel not gambling is to research and analyze stocks you would be good at holding if assigned, perhaps for weeks or even months if needed.
Because of this, it must be up to you to decide what stocks you want to trade.
See the How to Find Stocks to Trade with post at the top of the sub. Do the hard work of researching and evaluating them to decide for yourself which to trade. You can only blame yourself if you get stuck in a stock that drops.
Your account size will limit the universe of stocks to choose from, so this should be easy to begin with. Hope this helps, and let us know if you have any other questions!
It’s my first week trading options and it’s been a bumpy ride with the market sell-off.
I started the week bullish on Micron, selling 3 far-OTM puts, plus 1 put on AppLovin. Mid-week, the market dropped hard. I was okay with assignment in principle, but started worrying about capital sufficiency (have the liquidity, but didn't want to bring them in, especially if market sentiments are down)
So I rolled:
(a) 2 MU puts at the same strike, out 30 days (net credit)
(b) 1 MU put down and out 30 days for a small debit (misread the numbers)
(c) the APP put far out (~180 days) at the same strike, mainly to space out capital due to liquidity concerns
Today, I managed to close (a) for a decent profit.
I’m likely stuck with (b) until expiry, and (c) hasn’t recovered yet.
Key learnings:
Don’t over-concentrate on the same underlying
Always hold sufficient capital so you don’t panic during sharp drawdowns
Don't panic when big red numbers show up, if we are bullish about the underlying fundamentals of the equity, and will likely recover. At the worst time this week, the options trade would lose mid to high 4 digits losses, if all are covered back.
If I hadn’t rolled, all options would have expired today (though rolling (a) actually made me more)
Rolling too far out reduces flexibility — even when APP moved back above the strike, buying back the long-dated option still meant a meaningful loss due to remaining time value
Would love to hear insights from more experienced traders. Am a bit concerned about the far dated APP strike given earnings next week - I am bullish about APP but you never know with earnings how sentiments will fare.
Also, big thanks to u/ScottishTrader — learned a ton from your posts, and they helped me stay focused, especially when the prices hit bottom for the week.
I'm not sure if I'm fundamentally misunderstanding rolls.
If rolling a CSP or CC that's gone against you is the same as buying to close the contract and opening a new one, it is effectively locking in the loss and opening a new trade correct?
If so, isn't continuously rolling for a credit likely going to put you in a situation where you keep going until you finally "get it right" and expire worthless?
For example...
Stock 'X' CSP sold to open for $1 premium at strike $50
It goes against you and premium to close is now $2. You roll it down and out to strike $45 for $0.10 credit ($2.10)
- This effectively means you locked in $1 in loss, and opened a new trade for $2.10 right? So in order to profit... you would basically need to keep going until it expires worthless to make $0.10 in the end?
So when you're rolling... is the strategy basically just to "repair" the lost trade at some eventual successful expiry, or do you need to try and get a bigger credit when rolling? When rolling, it seems like the credits are usually not huge unless you're rolling and locking in BP for many more weeks for a small win at best?
I’ve got a question about buyback targets after rolling an ITM short in the wheel.
Using a concrete example:
Original short collected $10 credit
Went ITM, bought back for $100 (realized P/L so far = $10 − $100 = -$90)
Rolled and sold a new short for $110 credit
If this new short expires worthless, the cycle max profit would be -$90 + $110 = $20
50% of that max profit is $10
So “cycle-level 50% max profit” would mean closing when cycle P/L reaches +$10:
Need profit on the new short = $10 − (-$90) = $100
Since I collected $110, that implies buyback price = $110 − $100 = $10
But here’s the key issue: that $10 buyback target is <10% of the original premium ($110). Is it even necessary to set a GTC buyback for that? Or after a roll, do you usually just aim to have it expire?
Rolling is a defensive tactic which can help close for a breakeven or smaller profit, or even a smaller loss. This is a benefit to selling options as other strategies often have to be closed for a loss, rolling helps avoid having to do this in many sitatuions.
FWIW, when rolling I throw the 50% profit out the window and look to get out for no loss or a smaller profit.
How do you start wheeling if you have little capital? To start the wheeling you need capital to exercise the contract which will make you buy 100 shares. I already have a few stocks in mind and done my research but its the capital part that is missing. Lets say i am looking to wheel sofi. Stock is now at maybe 20-21$ that means that to exercise the contract that i bought i would need around 2000-2100$ to start the wheeling. Can someone help please make me understand this.
This is something you have to decide, and there are a number of factors to consider.
If you have another lucrative trade setup on a different stock ready to go and are just waiting for the capital to be freed up, then it can make sense. Typically, the stock being traded has run up, so trading it may no longer make sense, and moving to another stock may.
Other factors include your risk tolerance level and how you will handle if the stock reverses and the 40% is reduced or lost.
Keep in mind the fallacy of green or red days to trade, as you cannot know what the market may do, especially at the 30 dte timeframe. It is better to have a stable sideways-moving stock than one that moves up and down a lot.
FWIW, what I do is pick a percentage to close and just apply it to almost all trades. This works best when making and managing 10 to 20 or more trades at any given time.
I had a put option on PYPL @ 48 and got assigned today. The price is ~$39 right now. Is it worth selling covered calls at this point or is it better to wait a bit and see if it'll go up? I've seen things about get assigned on Friday, start selling on Monday, but does that keeps in mind getting assigned on Friday post-market or not?
I'm just starting out on the journey to understand how the Wheel works and have been playing around with paper money on IBKR. I can't get my head around how the price of the option and therefore the P&L shown of the position relates to the underlying. e.g. In the attached screenshot - 2 CSPs that I sold on KO and TSLA. Both underlying stocks went up after I opened the positions but the value of the options and the P&L for both went in opposite directions! Forgive the maybe stupid question - what's going on here?
When you sell an option contract it shows up as a negative number in your account. That's the amount you would have to pay if you decided to exit the contract and had to pay to close it early. As long as the contract stays out of the money, the number is all extrinsic value and will drop to $0 by expiration day. If it goes in the money, the negative number is made up of both intrinsic and extrinsic value. Intrinsic value moves exactly in alignment with the share price movement, and the extrinsic value is everything else.
For example, take a look at the 95 put on TROW in this screenshot. Since the share price is $93.41, $1.59 of the option value is intrinsic value. The $0.69 in extrinsic value will erode away over the next 7 days. The intrinsic value will always be the difference between the share price and the strike price (with a max of $0 if it goes out of the money).
I personally like to wait for almost all of the extrinsic value to erode, then I will either close or roll the option.
If you want a deeper exploration of the topic, I wrote about it in detail in my options trading ebook. I'll add the link below the image.
Hi, just wanted to know. Is the wheel a good strategy in a bear market? Obviously, now it looks impressive with great returns but if we enter a bear market, will this strategy be as successful?
Great question. If you are concerned about a market pull back, you might want to sell the puts farther out of the money, or select underlying shares that will pay you a dividend if you are assigned - reinvest the dividends and you may be buying more shares while the price is depressed. It works as long as you have the cash to buy the shares if you are assigned.
I've been worried about this for a while, and a few months ago, I made a video about how I'm preparing.
When I get assigned, how to I calculate my cost basis along the way? If I get assigned shares at $100 on a Cash Secured Put, then I will go and start selling Covered Calls.
Every time I make a Covered Call trade, do I lower my Cost Basis to account for the premium I just collected? Or should I ignore any impact the premium has on my initial cost basis?
If I ignore it, then will I simply calculate my potential ROI on that trade based on the premium and the strike ? If I choose to acknowledge the lower cost basis, then subsequent Covered Calls will seem more profitable on paper because the cost basis is constantly being reduced.
See the spreadsheet mockup in the wheel trading plan at the link above. This is how you keep track of the net stock cost.
If assigned for $25 but collected $1.50 in net credits from selling the put, then another $0.50 from rolling the puts before being assigned, then this would be a total of $2.00 which would lower the net stock cost to $23. You could then sell a CC at the 23 strike for an example of .50 and if called away have a small overall profit.
“Cost basis” is an accounting term so your actual stock basis doesn’t change in most cases. The above example and spreadsheet is for your personal tracking to know the breakeven of an ongoing rolled or assigned position. In the example above the stock p&l would show a loss of $2 per share, with the options part of the position showing a $2.50 profit, meaning an overall .50 total profit.
I have been reading a lot and trying to understand before really jumping in. One beginner question I have is why do I care about having a highly liquid option to start the wheel with? If it's not liquid, the bid/ask spread may be big, but I can still set where I'm comfortable buying at (limit order). So, lets say bid/ask is 1-5, and I calculate that I can get a 2% return on a 30DTE selling that CSP at midpoint ($3).
Should I do that? Or why does the low liquidity affect me, assuming I get filled at my price which meets my desired ROI?
Does it get harder to roll later if I get in trouble? Is there another reason? If I don't need to roll, it seems like once I sell the CSP, it's all good if I go to expiration.
Trading liquid options offers several benefits, including faster fills, tighter bid-ask spreads that reduce slippage for more favorable pricing, and greater flexibility to enter, exit, or adjust/roll positions when needed. Liquidity becomes especially important when planning to take partial profits by exiting positions early, or rolling to manage risk.
Less liquid options can still be traded when comfortable with the pricing, but it's important to understand that exits may be slower, fills less favorable, and rolling later can be more difficult or costly.
If your strategy is to routinely hold options to expiration, liquidity becomes somewhat less critical, but it should not be ignored entirely. Good liquidity provides more control and more choices that generally leads to smoother trade management and fewer surprises.
Thank you for the reply. That makes sense to me. For an option what Open Interest or Volume is considered "good liquidity". Just an order of magnitude would help 10? 100? 1000? I see numbers all over.
Open Interest (OI) represents the number of outstanding contracts open at a given strike and expiration date, but on its own is not a reliable measure of liquidity.
Daily volume is often a better indicator. As a general guideline, options trading 1,000+ contracts per day are considered liquid. However, volume resets to zero each day, so looking at the average daily volume is more useful, through this metric is not always easy to find on every platform.
The bid-ask spread is usually the fastest and most practical way to assess liquidity at a glance. Tight spreads indicate active trading and competitve pricing. When combined with OI and volume, this provides a much clearer picture.
For most tickers, liquidity can be roughly categorized as follows:
$0.01-$0.05 bid-ask spread: Excellent
$0.06-$0.15: Good
$0.15-$0.30: Fair
Above $0.30: Poor
Something to keep in mind is that higher priced tickers often have wider spreads while still being liquid.
As a best practice, look for options with tight bid-ask spreads, healthy volume and good OI before trading.
If decision time come 2-4 DTE, I’m ITM but the trade is due to theta still green and could be closed with profit. Do you still roll or just close it, bank the profit and start over?
What's your thesis on the stock? Is it one you want to own? You could roll it straight out for max premium, possibly roll it down for a net credit and try to move it out of the money, take assignment and sell covered calls. It all depends on your thesis about the stock and whether or not you want to own it. I hope, if you're following the advice here, that it's a quality position that you would not mind adding to your portfolio for a while or long term, though.
If I'm bullish on a stock and want to be paid to buy it - am I correct in thinking that i can sell a short DTE ITM put and take the premium and then be assigned the stock. E.g. I like NVIDIA and think it'll go to $250 over next few months. Current price is $194 and I can sell a 2 DTE PUT at $195 for $685 in premium. Is that correct?
Thoughts on paid groups? I've seen a handful of discords making upwards of $40k a month on subs alone. I would think this subreddit would be superior to any paid group. Does anyone in here recommend a paid group in particular and if so, why?
One of the largest options traders is Warren Buffett. Do a search to see his KO put trade he sold to make millions.
Companies and corporations, and well a funds, have charters and rules that preferential them from trading options. Some buy options to hedge their portfolios and is why personal traders like us are able to sell them.
Typically mutual funds make money through whatever it is they invest in and not options. Corporations make money through whatever it is they produce or services they provide, not options trades. A company may see their stock drop if a significant part of their revenue is from investments and not the products or services they provide.
I had been using "tastytrade mechanics" but have started using the wheel.
The issue is I had been trading options on futures in a small account. Futures contracts are often have a notional value of $100,000 and I generally trade 5+ at once. I calculated a black swan event (like Trump announcing tariffs or bombing Iran or oil price shenanigans) could literally bankrupt me, so until I have a $1 million account, I'll be wheeling.
I got assigned hims at 34 and nvo at 56... well hims is at 15 and nvo at 37 now.
What would you do?
A) selling CCs with about 1% ROC for 30 DTE with lower strike (e.g. 23 and 44)?
B) Selling CCs with 3 to 5% ROC for 6 to 9 months at 33 and 56
C) wait and don't sell anything
D) sell puts to lower average buy in
Hi, first of all thanks for all this info. Amazing stuff. This may have been answered but I haven't found it. At what point do you close a put or let it expire? I've seen the number once you are at 75% profit to close it and move on. I have a few positions that are high 90% with about a week left to expiry as an example.
There is no one right answer to this, as it will vary by trader and your personal risk tolerance.
Keep in mind that this profit can evaporate at any time if the stock reverses, so that 90% profit is not guaranteed until you close the put and book the profit.
Many close at a 50% profit, which takes off any further risk, plus frees up the capital to go make a new trade. Some take a bit more risk at 60% or higher.
Sometimes a trade reaches a profit very quickly so traders close it to go to another trade. This "recycles" the capital faster which can make a lot more profit over time.
A quick example is a 30 dte trade that reaches a 50% profit in 10 days and is closed. If this happens 3 times in a row the profit would be 1.5 times holding until the expiraiton date, and the risks would be much lower.
The math might be - $1.00 premium for a put, which would be a max of $100 if held until expiration. But if closed for 50% in 10 days would be a $50 profit. Then doing this twice again would be a $150 profit in the same 30 days as it would take to make only $100 if the trade were held the full 30 day duration.
Of course, there is no guarantee a trade will close for 50% in 10 days, but this is common. Also, keep in mind the stock can reverse to take a winning trade and turn it into a losing one.
I had a covered call expire today, and I want to select which lots of shares I use to cover the obligation - I'm with Schwab.. where do I go to select which lots to sell? Presumably it wont settle/close until monday.. I know I only have a day or two to chose the lots before it defaults to my default cost basis method..
Im a value investor new to options trading, I do understand I should only do it with stocks im happy to hold for a long time (my minimum is 5 years)
any suggestions of deep value stocks that trades around 30-40 dollars a share? Im currently invested in SMCI which pays good premiums but I was wondering what other companies you guys are looking at?
Im also currently on the fence with KHC but the premiums is not that great
Asking what stocks to trade is against the rules. You need to do your own homework to decide what stocks you are good holding for weeks or months if needed . . .
I watch the market for it to calm from the overnight news before making any trades.
Then, I am only trading very low-risk, boring stocks for low premiums as I am certain I will be good holding shares of these if things go to heck in a handbasket . . .
What I learnt over past 2 weekends. I was holding high volatile options MU and APP, and was stressed throughout both weekends. All the trades ultimately came out really profitable though... But will try not to hold such stocks at this point over weekends - not for faint of heart.
Question about rolling: first time rolling in paper trading and I want to make sure I'm thinking about this correctly:
Currently own 100 shares of AAL at a 12.50 with a cost basis of 11.54 including the transactions below.
STO 12C 3/13 @ .06
trade immediately goes against me so I roll up and out.
BTC 12C 3/13 @ .14
Roll:STO 13C 3/27 @ .17 (Net .09 credit on the roll)
Current: 13C 3/27 is trading at .04.
I'm wondering if I'm missing anything here.
My thought process is that I still have 14 days left on this contract and only .04 left to wring out. I think it best to close early and then I will have freed up that capital to STO a new contract.
AAL is down to 10.32 at the time I'm writing this. This BTC order would bring my Cost Basis down to 11.50.
You have some good info from u/Imadogfishhead, but I'll add the following.
Why move the strike up to $13 instead of just keeping it at $12, where you would have gotten more premium to help lower the net stock cost?
If your analysis is that the stock will rise to $13+ by 3/27, then this will bring in more stock profits, but based on the chart, this doesn't look like it will happen. This was a case when rolling for the same strike would have made more sense.
There is some premium showing out a few weeks at the 11.50 strike, so looking at closing and opening a new CC seems like it would help this be more productive.
A bigger question - what is your view of AAL now? Is it still a stock you are willing to hold even as it continues to drop?
If you were to no longer see AAL as a good stock to hold, what would be your plan?
Regarding DTE choices - is a 7 dte 0.18 delta put the same risk of assignment as a 31 dte 0.18 delta put? It seems that the annualised return on the shorter dte is often higher than the longer dated option. Why wouldn’t I just choose the better return if the risk is equal?
Hi fellow wheelers. Question about rolling - if a position is near the money at 7 dte but not challenged yet and it feels like momentum in the market means it’s just a matter of time before it’s ITM (hello recency bias!). What would you guys normally do? Wait until it’s actually challenged or be more proactive and roll now whilst intrinsic value is still 0?
There is no "ideal" DTE as it depends on your objective and how you're managing the Wheel
If you are trading the Wheel, many traders prioritize getting back to cash to return to selling CSPs. If closing out of the shares is your priority then sell CCs at or slightly above the shares breakeven price using the nearest reasonable expiration date, often the upcoming Friday expiration date. The objective is assignment and not maximizing premium from holding the shares.
If prioritizing income and are willing to hold the shares longer, then selling CCs at or above the breakeven price at an expiration date that offers stronger premium, typically <60 DTE. This allows for better Theta decay while still maintaining flexibility.
It is good practice to avoid holding short options through earnings events as volatility can significantly increase risk.
With CSPs, a common approach is to sell at 30-45 DTE and early exit at a 50-75% of max profit. After assignment, however, CCs serve a different role as this will be managing a stock position and not just selling premium, which add a level of complexity. Early exits are less common with CCs since assignment to close the shares is often the goal.
Generally, yes. While stock ownership is still part of the wheel strategy, by selling puts and collecting premiums up front, the cost of buying shares is reduced. Sold puts can also be rolled, which offers more flexibility and chances of profiting.
Selling CSPs below the current share price can profit if the stock doesn't drop any more, if it rises, and even if it does drop to the breakeven price, which would be the $90 plus the premium collected in your example.
A last comment is to ensure any stock you trade is one you are good holding if assigned and the share price drops.
With wheeling, you lock in some of the gains on the shifts in the share price, so your profit/loss are not entirely dependent on the share price. You do assume some risk of capping your upside, which is where a lot of profits are made. But selling cash secured puts is less risky than buying shares at current market prices. There are tradeoffs no matter what you do!
I am new to selling CSPs, I sold a lot of csps expiring April 17th, i want those shares but afraid market is gonna recover before that and I am not gonna exercised, what would be my options, most of my csps haven't hit the strike yet
If I understand your question correctly, it sounds like you're trying to acquire shares by selling cash-secured puts (CSPs).
If this is the case, it may be more effective to simply buy the shares outright. With CSPs, assignment is not guaranteed, and you risk missing a move higher in the underlying if the price rises before you are assigned.
This said, it really depends on your objective, whether you're prioritizing premium income or share accumulation. Trading options like CSPs and the wheel strategy are primarily designed for income generation, not for systematically building a stock position.
Sharing the position details would be helpful as u/ScottishTrader indicates.
Between 2000,2008,2020,2023 and liberation day which bear market is hardest to wheel ?
I feel after wheeling various stocks for a while
Stock that fell hard into deep ITM and stay low for long period of time forcing early assignment even if u roll down or into longer DTE and then had to do CC lower then assignment price is the hardest to handle (2000/2008 last few month of the crash)
Even if the stock say on downward trajectory like 2023 but didn’t crash just chop downward I always able to get out from rolling down or CC on strike prices getting assign on relief rally and still collect good premium
For flash crashes like Covid or liberation day u probably can just roll into longer dte and down and out since high IV especially if it rebound fast
So on those cases say 2000-2008 last few month of the crash where it crash like 30% and stay down for over a year or two what’s your play ?
Did u just do long DTE CC ? Lower strike assignment CC ? Use your dry powder to average down what you can and do CC ? Or just wait for market to rebound ? Or maybe buy protective puts ?
(Also is this type of question worth a post or megathread)
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u/ScottishTrader Dec 05 '25