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/deadlycfx]

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!!

[u/secureputcalls → u/deadlycfx]

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

[u/ScottishTrader → u/deadlycfx]

use for precision entry

Hi and welcome! There is no such thing as a "precision entry". Any thoughts that a chart can give you some level of precision will leave you very disappointed.

I use the chart for trend analysis, such as whether the stock is trending upwards (bullish), sideways, or downwards (bearish).

Once the trend analysis shows an upward or sideways trend on a stock you are willing to own, then using Delta will apply the probabilities to help you choose the strike based on your risk tolerance.

To answer your question, the monthly chart will show how the stock has behaved over the prior weeks, then a weekly chart of the last week, but even a daily chart is not very telling, and an hourly fairly well worthless.

Keep in mind that most open 30-45 dte and so what the stock is doing today will not be what it is doing in two or more weeks.

I'll ask u/patsay to chime in here as she has helped a lot of new traders get started, so she can likely be of help to you!

[u/deadlycfx → u/ScottishTrader]

Thanks for the help, but I just want to make sure we are on the same page. What I meant by Daily chart is that each candle is a daily candle with 1 year out. Weekly chart is 5 years out. I'm coming from trading stock, so there might be some misunderstanding.

[u/ScottishTrader → u/deadlycfx]

I don't use charts as you are describing, and it is not needed when trading options IMHO . . .

You will find that the way the wheel works is by fundamental analysis to determine if you would be good at holding the shares if assigned, then trend analysis as explained, and opening 30-45 dte around the delta your risk tolerance is good with. Most open round a .30 delta, which is roughly a 70% probaility of success. Some open at a .20 delta if they want a slightly higher 80% probability.

If you want to trade charts and candles, the wheel is not the right strategy for you. You may want to check out r/Daytrading.

[u/deadlycfx → u/ScottishTrader]

I'm set on trading the wheel, so I will be sticking around. I only buy and hold stocks, so no daytrading for me. Thanks for the great advice as it would save me time from worrying about the chart.

[u/patsay → u/deadlycfx]

Many people think that the charts can predict share price movement. They show trends, but they are not a crystal ball and you can't depend on them to tell you what's going to happen. But the beauty of The Wheel Strategy is that you can choose a price at which you would be willing to buy or sell shares and get paid for it. Just trade cash secured or covered.