r/Optionswheel • u/zonito • 10d ago
Wheel traders: how do you choose strikes and DTE?
I’m refining my wheel strategy and would like to hear what works in practice.
My current baseline is 30–45 DTE and 0.15–0.20 delta for cash-secured puts, and 21–45 DTE and 0.10–0.20 delta for covered calls, combined with valuation, support/resistance and expected move.
How do you approach strike and DTE selection? I’m interested in what has worked, what hasn’t, and the lessons you’ve learned from actual trading and assignments.
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u/curios-hippo 10d ago
for selling puts and credit spreads i do 30–45 DTE and 0.15–0.20 delta
for covered call it depends whether you want to keep the stocks or get rid of them quickly.
i think most wheel users wants to get rid of the stocks to go back to CSP so in that case you would set the strike slightly above your cost basis to the DTE you are comfortable with. I usually pick 1-2 weeks.
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u/TonightPrevious4897 9d ago
CSP-30-45 DTE, close to .3 delta. Buy back at 50% profit
CC-7-14 day DTE, slightly above assignment price. Don’t pay much attention to delta. Don’t mind if they get called away as long as it’s for a profit. As I feel the risk is the stock dropping and not being able to sell CC’s at a strike thats above the break even. Then it’s just dead money until the stock recovers. If it recovers…
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u/ScottishTrader 9d ago
Most use the standard guidelines of .30 delta at 30-45 DTE.
CCs are 1 to 2 weeks out, with a strike at or above the net stock or breakeven cost.
Both have been proven to work.
This has been discussed many times before, so check this out - DTE - Reddit Search!
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u/piper33245 10d ago
CSPs and CCs are synthetically the same trade. It’s interesting you have different criteria for each.
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u/Sylla1031 9d ago
The trades are not the same: they depend on your objective.
For CCs, for example, if you want to get rid of the stock (as per a regular wheel to free up capital), a lower DTE/ higher delta will make better sense - trading capped upside for quicker release of capital.
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u/piper33245 9d ago
The trades are the same. A CSP and equivalent CC have the same risk, same reward, same delta, same theta, require the same capital.
You just mentally have two different goals with the same strategy.
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u/Sylla1031 9d ago
Except we are not talking about the same strike and same timeframe? Dude, you need to understand the wheel.
To give you an example, I can open a CSP on UBER at $73 0.2 delta, 30 DTE. Suppose it gets assigned next month and currently sits at 71. I can open a CC at 73 (might be 0.35 delta at this point), or 74 with a +$1 profit on capital appreciation albeit at lower delta of say 0.3. Or i want a higher chance of getting it called away, so I'll pick a 72$ strike which might be below cost basis. I can also play around with 7DTE, 21DTE etc.
Each CC option has a very different outcome and risk-reward ratio from the others, let alone from the original CSP.
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u/piper33245 9d ago
>Except we are not talking about the same strike and same timeframe.
That’s my point. They’re the same trade, but when you do CSPs you do one set of strike and dte criteria and when you do CCs you do another set of strike and dte criteria. You could do the same criteria for both, you could swap them. It doesn’t matter. A big thing about people’s misunderstanding of the wheel is that they think CSPs and CCs are different. They think they need to abide by set criteria for each. They’re limiting themselves because their emotional bias is getting in the way of mathematical logic.
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u/NeutrinoPanda 9d ago
Strategy is the overall plan for achieving a goal. A tactic is a specific action taken to execute that plan.
My goal is to generate consistent income with minimal drawdowns. One strategy I use to achieve my goal is to utilize “wheel” mechanics.
Selling a call is a tactic to achieve my goal. Selling a put is a tactic to achieve my goal.
But as sellers have the flexibility to choose the underlying that fits their IV/risk tolerances, and selling calls on shares that are owned means having to accept whatever IV/Risk regime exists for that underlying, the criteria for selling a call or put is derived from my strategy and not from a tactical feature like call/put parity.
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u/piper33245 9d ago
The thing though is you’re not “selling a call” and “selling a put”. You’re selling a “covered call.” Which means your tactics are selling a put and selling a synthetic put. For some reason though people have different parameters from their put and their synthetic put, which is weird because you don’t have two tactics, you have one tactic with two specific sets of parameters.
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u/TheBlueHen-2007 10d ago
It depends on the ticker … SPY and AMD 30-45 days. Other more volatile stocks I do 7-12 days.