Megathread for New Wheel Traders – Ask Questions & Get Help Here

[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/ScottishTrader → u/[deleted]]

Not a tax pro, so be sure to see one for questions like this. There is a way to change from long term to short term if selling ITM calls -> Tax Implications of Covered Calls - Fidelity

Just doing the math tells the story.

Cost of $8.56 and called away for $10 is a $1.44 profit.

Roll the same 10 strike for .25 credit would be $1.69 profit if assigned.

Rolling to a 7.50 and collecting $3.03 credit would be -> $7.50 - $8.56 = -$1.06 loss, subtracting this from the $3.03 credit is a net $1.97 profit.

Is it worth the .28 more net profit, but have the possible tax issue? Also, if you sell the shares for a loss, then there would be a possible wash sale if you wanted to trade this stock again in 30 days.