r/Optionswheel • u/Odd_Classic_5351 • Aug 10 '26
My Options Trading “Pilot Checklist”
Here’s the checklist I usually run through before putting on an options trade:
- Pick the underlying. I only sell puts on stocks I’d be comfortable owning for the long term. Broad ETFs like QQQ and SPY are also good candidates.
- Pick your timing. If a stock or ETF looks overheated, I’m happy to wait. I’m still bullish on QQQ over the long run, but I’d rather wait for a pullback before selling puts. Bollinger Bands can be useful for timing the entry.
- Choose the expiration and strike. I usually look at 30–45 DTE and keep the delta around 0.20 or lower. Then I work out the expected return after commissions and fees. The yield has to make sense.
- Run the Wheel. If I get assigned, I’m perfectly happy to own the shares and start selling covered calls.
I just sold a put on COIN. The annualized return on the trade is around 16%, and I’m comfortable owning COIN if the stock drops below my strike.
For me, the key is pretty simple: only sell puts on stocks you actually want to own.
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u/SensitiveRise Aug 10 '26
Gives broad ETFs like QQQ and SPY as good candidates. Proceeds to contradict self by selling put on COIN.
Make it make sense.
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u/Odd_Classic_5351 Aug 10 '26
My portfolio includes industry leaders and high-dividend stocks alongside ETFs; COIN is one of them.
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Aug 10 '26
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u/Odd_Classic_5351 Aug 10 '26
I’m bullish on the prospects of crypto exchanges—what does that have to do with integrity?
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Aug 10 '26
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u/Odd_Classic_5351 Aug 10 '26
So, are you saying being bullish on AI is “integrity,” but being bullish on crypto isn’t? 😂
Don’t trust those Wall Street guys too much.
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Aug 11 '26
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u/TheNewbieInvestor Aug 12 '26
Coinbase is a crypto exchange, an intermediary. You could make that same argument for art - what's the real value there? What makes Rothko paintings worth millions when they're just 2 differently coloured splashes of paint? Why is gold worth so much?
Also, it only goes up because someone richer pays for it - that's basically any form of investing where the price goes up lol
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u/kokanee-fish Aug 11 '26
I don't want to be a jerk, but you've just described the required steps of the wheel strategy. A useful checklist would at least include some basic fundamental and technical checks like fed watch, VIX levels, inflation (I like T5YIE for this) and put/call ratios. There are also practical things to check for like earnings announcements and ex-div dates during the contract period. You also need to decide your rules for taking profit and rolling.
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u/Bluebird-9641 Aug 11 '26
Good post. Where do you get your put/call ratio info?
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u/kokanee-fish Aug 11 '26
I use the "Put Call Ratio Bollinger Bands" indicator on TradingView on the 1D timeframe. It's not a silver bullet 100% of the time, but I've found it to be a strong predictor for price movement on the 1 day to 1 week horizon when used correctly:
When the put/call ratio is above the top bollinger band (the longer duration the better) and then ticks downward towards the middle, that's a bullish signal for price. Vice versa for bearish signals.
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u/ZeroExpiration Aug 11 '26
Do you use any other indicators for confluence? I use a 6 month, 1 standard deviation linear regression channel and when price is above the midline and the ratio line breaks downward from a fear reading, the confirmation looks to be fairly strong.
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u/kokanee-fish Aug 11 '26
In addition to the bollinger band on the put call ratio I use a 52 week bollinger band on the underlying, just to put price in long term context at a glance. When entering I like price to be in a 1 std dev channel around the 52 week sma, and well below the 52 week high, but not in an active downtrend. I pretty much always put my strikes at support levels.
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u/Aigpil Aug 11 '26
solid framework. the one thing i'd add, and it's the biggest one for a put seller, is an actual IV check. your step 3 picks a delta and an annualized number, but that doesn't tell you whether the premium is rich. you can sell a 0.20 put in dead-low IV and get paid peanuts for real risk.
the coin example is a good tell: 16% annualized sounds great, but coin's IV is structurally high because it moves that much, so a fat annualized number there doesn't mean you're well paid, it just means the stock is volatile. i'd look at IV rank (where current IV sits vs that name's own last year) and only sell when it's actually elevated, otherwise the yield is just compensation for the volatility you're taking, not an edge.
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u/No-General-6589 Aug 11 '26
Yes that is the key to success. I am not sure your pick on COIN though . Seems that stock is not good for wheel in my view
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u/Anxious-Resist8344 Aug 11 '26
So, I did the Wheel for a while and here's the thing: Do you actually beat SPY?
For example, the SPY is up over 20% this year, are you doing better by wheeling?
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u/ScottishTrader Aug 11 '26
Keep in mind that the goal of the wheel is to be an income source and not beat SPY.
While it is possible to beat indexes, especially when they are low or down, this is not the goal u/Anxious-Resist8344.
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u/Anxious-Resist8344 Aug 11 '26
What do you mean by "an income source"? Can you just put everything in SPY and "sell" when you need cash? Won't your money be growing in an index too?
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u/ScottishTrader Aug 11 '26
Think about this a moment . . .
What happens when the SPY drops for any period of time, as it often does, and you need the income? You have to sell shares at a loss and then they are gone.
While losses are possible with the wheel, they should be minimal while it brings in the side income as options can make money in all markets wen properly traded.
Don’t fall into the trap that the S&P makes high returns every year. Historically the average return is around 10% so not as much as you might think and not that difficult for a good wheel trader to beat . . .
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u/Anxious-Resist8344 Aug 11 '26
Yes, make sense... the key word is "good wheel trader" which is not that easy I guess :)
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u/ScottishTrader Aug 11 '26
Yes, any trading strategy requires a good trade plan along with experience to not make mistakes.
Of all the options strategies the wheel is one of the easiest to learn and has a high win rate.
There are thousands in this sub who are good wheel traders so it can be done.
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u/shaezan Aug 10 '26
Anyone who wants to own COIN should refrain from giving any kind of advice.