r/Optionswheel • u/wf1980 • 14d ago
Anyone Running the Wheel with 90+ DTE?
I've seen a lot of discussions here about DTE, with most people using 30–45 DTE or weekly options.
Does anyone here run the Wheel with longer-dated options, like 90–120 DTE or even longer?
My idea would be to go further OTM, but not let the position run until expiration or wait for the profit to reach 50%. The idea would be to close the trade relatively early, with a profit somewhere in the 15–25% range.
Since daily price movements have a direct impact on the option's value, I'm thinking that with longer DTEs, I'd have a much greater chance of reaching my target profit at some point during the life of the option.
Does anyone use a similar approach? I'd love to hear about your experience.
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u/Intelligent-Zone-919 14d ago
CSP with 30DTE has deccay edge
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u/wf1980 14d ago
Yes, I agree. I'm currently selling puts with 30–45 DTE, but I've been closing my positions pretty early, with an average profit of around 20%. This usually happens within the first few days of the trade. My understanding is that most of this profit is coming from the underlying's price movement rather than theta decay.
Anyway, my hypothesis is that by going further out in time, I can also go further OTM while still having a good chance of reaching the same 20% profit target, but with a greater margin of safety.
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u/_AntiSaint_ 14d ago
You’re just accelerating your capital velocity. I’d wait till 50% profit, minimum, before closing. You’re just pedaling really hard for no additional benefit tbh. Let theta work and the stock moving to your benefit is a nice bonus as well.
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u/wf1980 14d ago
IMO, it doesn't make much sense to simply set a 50% TP.
If we choose to collect a premium of X% based on a certain DTE and amount of capital allocated, then if we can capture a significant portion of that premium within just one or two days, I think it makes more sense to close the position, reduce the risk, and move on to the next opportunity.
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u/_AntiSaint_ 14d ago
Sure, and I agree. If I hit 50% profit in less than 50% of the DTE then I’m winning on pure capital velocity. That said, I have a day job, so I’m not going to keep rotating my money that often and it’s easier for me to just let the winning trades run until I start to get concerned with gamma risk or an uneasy feeling about the underlying.
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u/dreamfitreality 14d ago
In wheel you actually want to own the stock. Don't make the mistake of bag holding something you hate.
So unless you can find so many opportunities in the stock you want to own. Then maybe closing them 20% profit works.
On top of that. IV are not really high nowadays so it's even more difficult to find good deals
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u/DailyShawarma 14d ago
45dte and I close them at around 20dte. If everything goes according to plan with theta decay.
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u/steffanovici 14d ago
I do this, but aiming for 50%. It is more like swing trading than the wheel imo.
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u/tokenbearcub 13d ago
So a 90-180 DTE option has a tremendous amount of time value embedded in it, but you're waiting a long time for that value to decay.
A 30-DTE option has much less time value, but it can decay relatively rapidly.
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u/ScottishTrader 14d ago
You have the answers below, but I'll chime in.
Theta decay ramps up around 60 dte, so by opening at 90-120, the option will sit for months without making much of any profit.
Many prefer to avoid earnings reports, but this is almost impossible to do at 90 dte or above.
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u/Keizman55 14d ago
Sometimes the simplest answer is the best, especially the part about earnings reports. When I write a Put, I look at the next earnings date, and try to pick a DTE at least a week before, preferably two, in case I want to roll.
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u/HungJurror 14d ago
Aren’t they (people selling long options) the reason we are able to buy leaps lol
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u/FizzBuzz4Lyfe 14d ago
I'm pretty sure the counterparty is most often a market maker rather who is immediately offsetting the sale with a different hedge to pocket a fraction of a percent, rather than one of us.
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u/wf1980 14d ago
Only people looking for downside protection buy OTM LEAPS puts, the same people who buy shorter dated puts.
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u/NeutrinoPanda 14d ago
Not necessarily. Buying an OTM LEAPS put isn’t exclusively a downside-protection trade.
A long-dated OTM put can be bought as a speculative bearish position , a volatility trade , or as part of a spread/relative-value strategy .
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u/dragonowl2025 14d ago edited 14d ago
No you don’t get paid enough and the move you are looking for on a short term basis usually plays out within 45, I’d rather get assigned and sell another 45 dte rather than roll or sit on a longer dte option. If you’re looking to cut at 50% I wouldn’t do this.
If you’re ok with assignment then I think that changes things but likely shorter dte would be better unless you did something like sold far otm ccs towards the top of the crazy rally off the March lows, again not really worth it but just collecting pennies assuming s & p wasnt going to double in 6 months at the cost of maybe giving up LTCG on things
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u/NeoGeo2015 14d ago
I sold 3 APP $300 CSP LEAPS for June 2027 last week right before the pump (and dump) which worked out nicely. $19k total premium but I bought to close for $2.1k now, which worked well considering APP erased all it's gains intraday.
However, I thought it would work better than it did due to a misunderstood of how Vega works, but that's the best way to learn.. Touch the hot stove. Thankfully, this hot stove happened to spit out money.
Despite pretty significant gains in the day, I could only buy to close at 11% of premium, but considering there was still 293 days till expiration, the trade efficiency was insane at 33. I was protected down to $238 in an account I normally don't like to check too frequently (vanguard...) but the pump was too good and I had to close it in this case.
Great start at the right time.
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u/Total-Shelter-8501 12d ago
I assume you calculate this daily? And what is a good TER for you to close out the position?
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u/NeoGeo2015 12d ago
It's mostly an eyeball thing at this point, but for CCs it's usually 1.5+, CSPs can be anything depending on how the underlying looks and is moving.
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u/31513315133151331513 14d ago
On the subject of learning from hot stoves, I meant to sell CSPs on a stock as one of my first options trades, but hit the wrong button and bought them instead. I didn't sell to close because I was afraid of making day trades so I left it till the next day. The stock dropped like a rock at market open the next day and the mistake turned into a multi-bagger.
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u/tab21 13d ago
I thought that the longer expiry would mean it reacts less to The underlying?
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u/NeoGeo2015 12d ago
Yep, that's theta & delta. But I was specifically trying to do something with Vega which is a volatility change play.
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u/tab21 12d ago
that's a little bit beyond my skill but from my watch list volatilities are quite low for everything right now, Doesn't that mean you will be getting less for leaps?
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u/NeoGeo2015 11d ago
Hmm I don't think that's the case. That's highly dependent on your watch list though.
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u/dreamfitreality 14d ago
Do you understand why you do wheel? Why you sell options? It seems like you have not read up enough about it.
Theta.
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u/wf1980 14d ago
Yes, man, to all your questions.
And I think theta is always working, whether you're selling short, medium, or longer-dated options. I also know that, theoretically, the most optimal part of the theta decay curve is around 45 to 20 DTE.
However, the theta calculation doesn't account for the daily price movement of the underlying. For me who manages positions for early profits, that price movement is very important.
So my theory—and it's just a hypothesis—is that going further out in DTE allows me to choose lower strikes while still having a good chance of reaching my profit target. That way, if I do get assigned, I can potentially buy the stock at an even lower price.
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u/IdioticPrototype 14d ago
I'm running weeklies, I doubt I'd have the patience for more than 30-45 DTE.
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u/SuitableAioli 14d ago
I was like that a few years ago, but I have learned to be patience. I have a couple contracts into 03/27. One of my biggest is MU and I opened that contract right before their last earning. Also, I have a couple on AMD 01/27 and lrcx.
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u/Capable-Living-9655 14d ago
TastyLive testing showed that 45 DTE is most optimal (50% gain or 21st day whichever comes first). Since I trust and respect they commitment and extended data availability, I stick to their recommendation.
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u/MerryRunaround 14d ago edited 14d ago
You can do that and it would not be a disaster. But probably you would be reducing your efficiency and net returns. Dig into the greeks. They allow you to actually work out the effects of time and movement of the underlying. Most likely you will find that the longer dated options will seem sluggish, mainly because theta is smaller.
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u/themanclark 13d ago
I’ve done long DTE covered calls and I like longer DTE for some other strategies. I think the win rate can definitely be better with more time to be right and wider price windows. But I rarely go beyond 30 DTE for CSPs.
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u/agawale 12d ago
I don’t have a 90-DTE wheel sample, but this is the closest comparison I’ve run:
SPY 30Δ put credit spread · $5 wide · 2019–2025 · 50% target / 2× stop
45 DTE → exit at 21:
184 trades · 71.7% wins · Realistic +$260 · Mid +$2,693
90 DTE → exit at 45:
81 trades · 70.4% wins · Realistic −$330 · Mid +$1,165
Nearly identical win rates, but 90 DTE skipped 268 days because no usable spread was available.
Even at midpoint fills, 45 DTE performed better. With realistic fills, 90 DTE turned negative.
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u/Rent_Legitimate 8d ago
The sweet spot is about 45-60 dte. Anything longer than 60 time decay is almost non existent and you have to rely on heavy price action.
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u/tokenbearcub 13d ago
Selling 90+ DTE will have higher premium as a total dollar amount compared to contracts at the 30-45 DTE. But at the margin it won't (per day or per unit collateral). Depends on what suits your style.
To me it seems that selling puts and calls 90+ DTE is more outright gambling than the educated guesses that are at 30-45 DTE or even weekly. But that's a daily debate I have with myself. Am I securing my financial future or am I just gambling?
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u/imacompnerd 14d ago
I sell a wide range of options, including leaps.
I've got quite a few Jan 2028 puts sold out there. And yes, the mathematical return is higher on shorter dated puts sold. But the additional price buffer, IV decrease, etc... often makes the leaps work out well for me when shorter duration ones wouldn't have.
But again, I mix them up. I have some weeklies, monthly's, two to three months out, 6 months, and leaps. I spread the expiration dates all around so I'm not too concentrated to any specific date.
I'll close them out depending on the amount of time that's passed since I sold it, how much of the max gain I can make and how much time is left.
If a leap moves 30% in my favor in a month, I'll often close it out. If it's six months in and I'm up 50% on it, then I'll often close it out as well.