Trading The Wheel Options Strategy - 3 Reasons Why You’d Lose Money With This Strategy
Вставка
- Опубліковано 11 лип 2024
- Trading The Wheel Options Strategy - 3 Reasons Why You’d Lose Money With This Strategy | Coffee With Markus | Episode 138
They say that more than 90% of traders lose money trading options. The wheel options strategy has been around for decades and it's one of the few strategies that can help you make consistent profits trading options.
But you can also lose a lot of money when trading The Wheel options strategy!
Watch this video to find out what these mistakes are, and how you can avoid them so you don't become part of the statistic!
Intro: 0:00
Common Mistakes: 2:15
My Positions: 5:30
Solutions: 14.50
Deep Dive Q&A: 31:35
This morning I woke up and my account was down $25,000 ($18K at the time of this video). This is on a margin account with $500K in buying power.
3 Mistakes:
1) Panicking and closing your positions at a loss.
2) Not having a plan.
3) Not having a tool that helps you make the right decisions. (PowerX Optimizer)
Solutions:
1) Don't Panic.
2) Don't close your positions.
3) Evaluate what's happening.
4) Follow your plan/strategy.
5) Have the right tool to make the best decisions
5 Positions in my account:
- AMD: if it stays above 83.50, I will make money = $576 in premium for the week
- DBX - Needs to stay above 21.50 I'll make $611 in premium.
- GDX (In Trouble): Last week I got assigned 2,100 shares at $48. I sold the 49 calls (21 contracts X $75) for $1,575 in premium.
- RIDE (In Trouble): If stays above 21.50, I'll collect the premium. It is unlikely it will probably get assigned 4,700 shares at $21.50. I sold 21.50 put s (47) and collected $1,974.
- AAPL (In Trouble): Got assigned 800 shares at $133.
Collected a total of $4,736 this week.
I am excited to get assigned. If you are not ok with getting assigned, you violated the number one rule of "The Wheel Club:"
"Don't Sell Puts On Stocks You Don't Want To Own"
After assignment, I will sell Calls and collect premium.
I will get assigned 4700 shares of RIDE at 21.50.
I will sell calls on Monday for about 0.43 and collect 2,021 in premium. (this is if RIDE opens on Monday around this price).
GDXJ: Got assigned at 47, and was assigned 2,100 shares. If GDXJ stays about where it is on Monday and can sell calls at 0.60, I'll collect $1,260 in premium.
With AAPL if I sell the 133 strike, I will get 0.13 making $134.
Recommended Links & Videos:
Trading with Margin: • Trading With Margin - ...
Options Trading 101: bit.ly/2V7Nf9T
The Options Wheel Strategy: • The Options Wheel Stra...
The PowerX Strategy Playlist: • The PowerX Strategy
#Options #SellingOptionsForIncome #StockMarket
================================================================================
✅ First, subscribe to my channel here so you never miss a new video: bit.ly/3aLKLDz
📺 Watch My Daily Trading Routine that takes me less than 15 minutes a day: go.rockwelltrading.com/my-tra...
📕Get a FREE Hardback Copy Of My New Book “The Wheel Options Trading Strategy”: go.rockwelltrading.com/the-wh...
💻 Need a broker? We prefer trading using Tradier! Sign up here: go.rockwelltrading.com/tradie...
📈 TradingView is my favorite charting platform. I use the Pro Version: go.rockwelltrading.com/tradin...
================================================================================
tastyworks, Inc. (“tastyworks”) has entered into a Marketing Agreement with Rockwell Trading Services, LLC whereby tastyworks pays compensation to Rockwell Trading Services, LLC to recommend tastyworks’ brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Rockwell Trading Services, LLC by tastyworks and/or any of its affiliated companies. Neither tastyworks nor any of its affiliated companies is responsible for the privacy practices of Rockwell Trading Services, LLC or this website. tastyworks does not warrant the accuracy or content of the products or services offered by Rockwell Trading Services, LLC or this website. Rockwell Trading Services, LLC is independent and is not an affiliate of tastyworks. - Розваги
My aunt passed and I inherited some of her portfolio and cash savings, I’m 28 with about 400k cash in savings and as usual everybody’s preaching invest, so what stocks are a good long term buy, only major purchase I intend to make is buying a home in 5years from my returns
Keep learning first. You can listen to my audiobook here loom.ly/BV2QgYY
Vivian Jean Wilhelm is her name. She is regarded as a genius in her area and works for Empower Financial Services
Thanks for the advice. The search for your coach was simple. I investigated her well before using her services.
I really like your videos. Thank you for going over everything so simply.
Awesome! Thank you for watching! :)
Great video. Thank you for your transparency.
😊 You are welcome! I am glad that this helps!
I'm learning so much from your videos and books. It's a little overwhelming at first but so worth it. Thanks for sharing your knowledge and experience!
😊 You are welcome! I am glad that my books and videos help.
love the energy!
Thank you! :)
Yes breaking it down is very helpful. Keep up the great work!
Awesome! Thank you for watching and for your kind feedback. ;)
Hi Markus, missed the live show today, watching the recording now.
Made money with the wheel this week despite the last 2 days. Thank you for teaching us NOT to panic and to follow the plan, I too love to get assigned. Love the wheel! 👍 have a great weekend :)
Awesome! Thank you for watching! :) I am glad that you are doing well.
Keep doing this Sir! I like it!
Awesome! Thank you for watching! :)
this is VERY helpful! Thank you, Markus!
You are welcome! :) Care to share how this video has helped you in your trading?
I'm 9 months late, but thank you for your videos. Very straightforward with no frills attached. Easy to understand the concept!
😊 You are welcome! I am glad that this helps!
This strategy is working well for me! Thank you Markus!!!
You are welcome! I am glad that this helps! :)
I like that you are sharing your account. Good or not so good positions
No sugar coating. Tough love thanks.
😊 You are welcome! I am glad that this helps!
Hi Markus, this video is so helpful. Thank you.
😊 You are welcome! I am glad that this helps!
Thank you Markus. I learned about the mistakes I am doing in wheel strategy👍🙏
You are welcome! I am glad that this helps! :)
.. fantastic.. this is very educational channel. I love your personality sir and ty.
Awesome! Thank you for watching! :)
Watching this I had a lightbulb go off. That the stock you are assigned just happens to be a way your buying power manifests. Rather than cash (which you use to sell PUts) you have a stock (which you use to sell CALLs).
I had always interpreted “stock you like to own” as a value stock (since that’s what I like to own). Now I see that it can also mean a stock that others would like to own so they won’t just fade forever.
Awesome! Thank you for watching! :)
Hi Markus. I love all of your videos but this is one of my favourites. Thanks for the great advice!
You are welcome! I am glad that this helps! :)
yay I was the 300th like! small wins... big gains! Ordered your book 📙
Awesome! Thank you for watching! :)
Great video Markus, you have just calmed my nerves, was definitely panicking, going to work on my plans. Thank you!
You are welcome! I am glad that this helps! :)
Great video!!
Excellent video, TYVM.
You are welcome! :)
Loved it. Im following this strategy in Indian market and it works perfectly fine there as well. Currently im in trouble where I might need to take delivery of a stock called HDFC Bank. But after this video I wont panic and will do more call selling of next expiry. Cheers!
Awesome! Thank you for watching! :)
Very clear, thanks
You are welcome! I am glad that this helps! :)
So lucky to have found your channel this week.
Awesome! Thank you for watching! :)
I am learning and appreciated the explaination.
Awesome! Thank you for watching! ;)
awesome possums Markus...loved it
Awesome! Thank you for watching! :)
Very helpful video! I am in very similar position, just different stocks and much smaller scale.
Awesome! Thank you for watching! :)
This video is very helpful and please make more like this
Awesome! Thank you for watching! :)
Thanks, very beneficial! 👍
You are welcome. How are you trading so far?
Thanks for the lesson.
You are most welcome!
I was watching your videos a couple of years ago and learned so much. But I got out of trading because of time constraints. Now I'm looking into it again, and have been learning a lot from others, but they don't always make things as clear, nor do they usually share the down sides. For this I am so glad I came across your videos again. Thank you.
Hi there!
I'm Cristy, Markus Heioetter's assistant. Markus has a new audiobook out! It teaches you how to make more money through smart trading and investing.
Want one?
very helpful, thank you
You are welcome! I am glad that this helps! :)
While ride did not go as planned, I personally believe it’s one of the most valuable aspects of your UA-cam channel. It shows the reality of trading and that it can quite literally happen to anyone if they get loose with their strategy.
Well said and very true!
Great Video Markus !!
Thank you! ;)
Agreed. Please advise your updates on these stocks and why you didn’t roll positions.
Awesome video AGAIN! Markus...ty you for your openness, positivity and explaining situations. BRAVO!
STOLAT! your friend JOHN S.
You are welcome! I am glad that this helps! :)
Sorry to see the drawdowns, but I really appreciate the transparency you are sharing with us.
You are welcome! I am glad that this helps! :)
Very nice video. I always like to look at how things can screw up and what you can do about it to help the trade in your favor.
Thank you, Airon! ;)
Hey Markus! Great video --- I got assigned on ALL 5 of my positions this week! I am the happy owner of shares in GDXJ, AAPL, AMD, NIO, and RIDE. Monday should be exciting :-)
...and what happened?
@simonmasters3295 this was several years ago when I was very new at trading. The first 4 positions closed successfully and RIDE was the group's nightmare. I closed RIDE when it dropped to 12 for about a $6500 loss. Lesson learned, I no longer trade companies with no revenue
Well, he isn’t the happy owner of RIDE.
@@InvestorAcademyPodca this was a long time ago. I ended up closing that trade near $11 for a $6k loss. Good learning experience in my first year trading
I started trading this strategy before I even realized there was a name for it! Thank you for sharing your knowledge. ❤😊
You are welcome! ;)
I remember when I saw the start of the strategy and also tought that you where overly conservative... now I see! In Tuesday I had to close some of my positions to maintain the margin and had to close at a lose, almost 25% of my already small account was wiped out 😅😅, this time i let some room and thankfully fared better. I like the way you put even your loses! A lot of traders only put their wining trades and kind of want to make it look easy, almost like a scam! Thanks 🙏
You are welcome! I am glad that this helps! :)
I really like how you walk through the situations and what to do. I’m learning a lot from your videos. Thanks.
I would second this. I have watched a number of his videos now, and while he is definitely a salesman and does lay the pitch on a bit thick at times; He has really explained a lot of important things, talked through a number of situations, and I have yet to catch him BSing the details or trying to sell people on acting like maniacs. That "dropped my crystal ball" comment had me rolling; I wish more people in his position would leave their crystal balls at home.
You are welcome! I am glad that this helps! :)
Markets with Markus!!
I just found you - I’m going to test the wheel strategy on Monday using PLTR - just 1 contract. By the shares and then sell a covered call as long as the market looks like it might try to pop. I like and subbed and will be following your channel. Thanks for the great, detailed content .
Awesome! Please reach out to social@rockwelltrading.com if you need assistance.
Yes! Markus.
Awesome! Thank you for watching! :)
This guy is high all the time. Love it
Lol! Thank you!😉
I do love your videos
Hey Markus, thanks for all of your informative videos! Quick question.. how are you calculating the "minimum option premium" when it comes to selling calls?
Hey! Markus, you're a really useful person. I'm asking you to make more videos about Binary Options and their strategies. I hope you see this comment.
Yes very helpful thank youuuuy!!!
You are welcome! I am glad that this helps! :)
@@rockwelltradingservices wow you replied thank you !!! I call the weel my little cows of profit selling calls and puts
Awesome! Thank you for watching! :)
Thanks for the video Markus, I'm stuck in a trade with WMT at the moment... Your AAPL trade is similar
You are welcome! I am glad that this helps! :)
I've done this a few times last years and a little this years so far. Mostly penny stocks and not mid to large cap stocks. I hold them no matter what....
You have been such a blessing to my trading. I love the wheel; my plan isn’t as aggressive as far as ROI so I’m selling way out of the money puts but I’m still making a good monthly income. I have not yet been assigned but I know will likely make way more when I do get assigned. Thanks so much.
That is really great. I am curious just how far OTM you are going?
To me that is the benefit with options....you can take on as much risk as you want. That way you are balanced and can always stay calm.
Also it is important to invest a certain size of your portfolio and have enough cash available for assignment.
Hi Richard Thorne, thanks for watching. And thanks for your feedback. Much appreciated. "See you" in the next video 👍
Hi Markus, thanks for your videos. it’s definitely helpful for a beginner options trader like me and your step by step demos using a live account definitely makes it easier to follow.
have u been a lecturer / teacher by any chance? as your videos are easy to follow and understood! thank you
Hi Xi T. I am not really a teacher by profession but teaching is my passion. ;) I am glad that you find this helpful. ;)
yes
I feel like im hearing Owen Wilson, and i love it
Awesome! Thank you for watching! :)
How is your trading plan going? Let me know how you're doing in the comments below.
Recommended Links & Videos:
Trading with Margin: ua-cam.com/video/UHy84SOGl4Y/v-deo.html&feature=emb_logo
Options Trading 101: bit.ly/2V7Nf9T
The Options Wheel Strategy: ua-cam.com/play/PLBa3sAx-Io2nosgosERUhIZwzvIgD-3Vq.html
The PowerX Strategy Playlist: ua-cam.com/play/PLBa3sAx-Io2l9ZV4s66J-uNkG6AJvhSPB.html
Thanks Markus
You are welcome! ;) What have you learned so far?
@@rockwelltradingservices a lottt. Wheel strategy, power x strategy, indicators, support & resistance, and keep going and learning with your amazing and unique teaching videos. Thanks for every minute you are spending for teaching
Awesome! ;) I am glad to provide value!
if we enter a bear market, would the wheel strategy work?
@@ChristmasLights2 keep buying more of the same contract of it starts to lose money?
Very good
Awesome! Thank you for watching! :)
Thanks for this Markus, sad that I just came upon your videos only now. If I had seen this earlier it would have help me avoid my current 60k unrealised lost. This has wiped out my options premium of 15k profit for 3.5months.
I am sorry to hear that. At Rockwell Trading, we believe that we earn more when we learn more. By the way, this is Cristy, Markus’s page admin. He has a new audiobook teaching people how to make generational wealth by trading and investing smartly. Would you like a copy?
l am learning.
Awesome! Thank you for watching! :)
I like you investing mindset
Thank you!
Love your content! So helpful thank you!! We’ve been trading the wheel for just 3 weeks now and got our first assignment today. How do you know at what point to sell the CC on Monday? When do you pull the trigger? Thanks!
I would sell calls with a strike price 5% to 10% above the market price. 😊
I'm a little confused about why you were assigned AAPL shares and were "unable" to sell premium against it, why not just sell above the assignment price, regardless of the amount you would collect? Isn't collecting $100 better than nothing? If it does go up you can roll another week to collect more premium which would give you a more respectable gain, if it doesn't go up to the sold strike you keep the $100. If it keeps falling another 7% you still collected more money? I would think the only premium which is not worth collecting is if the commissions would be more than the amount collected.
I am of the same opinion
What a great explanation, just don't panic because it is normal for the market to go up and down. This month you lose next two month your even and next following you are a winner again as long you don't sell and will keep holding your Stock. You will get panic only if War happened.
Awesome! Thank you for watching! :)
aBSOLUTELY HELPFU mARKUS!
You are welcome! I am glad that this helps! :)
So, instead of rolling the option on Friday afternoon, Markus prefers riding "bareback" over the weekend - smoking the hopium of price improvement in the underlying on Monday ... or Tuesday ... or whatever. At some point, if the price does not come back you gotta close the position for a big loss or write that option that "locks-in" a loss, just to lower your cost basis. This is the tricky/art of the wheel trade Markus ain't tawkin-bow cuz he wants to blow sunshine up your xxx.
What gets me are all these really young guys who started UA-cam channels last summer doing the Wheel and other option-selling strategies. They don't even have a track record during last March when the market tanked. They seem to think the market can only go up and selling premium is free money.
@@johnp7739 there is risk in the stock market. And yes you can stress anything to the point that it’s impossible to recover. But that’s highly unlikely. The market has always recovered after every correction and bear market particularly quality companies. If you have fear stay out of stocks b/c you will panic and make poor decisions.
@allen everhart
"At some point, if the price does not come back you gotta close the position for a big loss or write that option that "locks-in" a loss, just to lower your cost basis." Rule #1) NEVER close a position for a loss. That includes, NEVER sell a cc with a strike BELOW your cost basis.
Obviously you missed his video showing how he ended up with a profit even after TQQQ tanked. It was EXATLY the tricky/art of the wheel trade he showed us.
Jealousy is wanting what someone else has. Envy is not wanting someone to have something, if you can't have it too. I'm guessing you are both. You are jealous and envious of his success, as a trader, and a teacher. Sour grapes, man.
@@johnp7739 Sorry for the harsh words but I think maybe people needed an injection of some trading reality. Sometimes stocks go down and they don't come back. And if they do come back it could be years before they recover. A perfect example is GE, my personal wheel waterloo. I started a wheel trade on GE when it was trading in the $40 range. As GE's price fell, I took assignment on my shorted-puts and rolled call options on GE stock down to $20. Then, the roll premiums I was getting at $20 would have taken some 3 or 4 years to break even on the +$20 loss on the shares. Eventually I wised up, took the loss and found a better wheel opportunity. Given that GE went down into single digits and has barely recovered into the "tweener" price range, I consider taking that loss at $20 to be one of my better trading decisions.
@@alleneverhart4141 exactly... my parents had GE Corporate bonds that blew up on them... “lucky” they only lost 80% when they dumped them... some fools stayed on the sinking ship and lost everything.
Markus gave some VERY BAD ADVICE about holding a losing position forever.
Hi Markus, do you look at the risk reward ratio (premium / buying power) or just look at the technical analysis?
Haha, I'm currently down around 5k on one of my positions which i'm selling calls against, so i know the feeling Markus. Your expression after 12:40 was gold. Heheh. I'm not stressing, because, like you are saying, i'm not panic selling and i have a plan 👍
Just curious, what's your plan if the market keeps tanking into a real bear market? What if it falls over 30% (like last March) but doesn't recover right away like it did last year?
@@johnp7739 If you are holding a quality stock and have free cash in the account, you would wait when it drops enough that selling covered calls don't give you enough premium, then start selling cash secured puts below the current price to get better premiums with the covered calls (basically a cash secured strangle). If it keeps dropping, you now got assigned more shares but at discount. Now your overall stock position price is lower, so you can continue to sell calls at lower strike to get better premiums. and hopefully get called away at your new break even. Does this make sense? 😎
@@johto Yes. Just hope the stock doesn't turn out to be another Enron, though...if you're old enough to remember it.
@@johnp7739 Yep. Thats the rub 🤔
So much doom and gloom! The stock market always goes up. Have a plan.
Me watching this while ride is at $12 strike. I am so feeling your pain right now.
It closed at $8.92 today.
@@cryptoenthusiast4999 lol ouch
You're awesome Markus! Question -- You say if AMD & DBX close above $83.50 and $21.50 respectively, you'll just collect premium. Got it. Are the expiration dates of the option chain the same - February 26? I guess what I'm wondering is - do you do this evaluation (as your describing) every day? Or just when you're positions are deeply in the red? Or just when they are nearing expiration? Thanks :D
Very good video. Very useful. But how can you lose money on the wheel? Your trade were all pretty positive? Thanks for sharing the wisdom!
😊 You are welcome! I am glad that this helps!
It reminds me of that classic song: Roll your trade roll, roll, roll your trade! Its a boat? who would roll a boat?
I'm very late to the party but am looking forward to doing this with those types of stocks but for now I'm stuck with cheap stuff to make the cash for the big boys. All in time.
Awesome! All the best.
I was gonna get assigned 1k shares of NKLA on Friday but I closed position, however I didn't want any open positions this week because of Q2 data thus week, possible recession. That was my plan.
I was assigned WKHS at $35 a few weeks ago. I was excited to own and then sell premium, but now the equity is half the price after it lost the USPS bid. I will continue to sell calls, but its looking like it will take a LONG time to make enough premium to turn green on this one trade. Is being patient a good decision. I am NOT nervous or panicking - but I wonder is closing the loss will open up the capital for better trades? Thoughts?
I am not a financial advisor and a beginning trader IMO the best way to recoup your loss would be sell CC closer to current trading prices if they are in danger of being called away roll your price up and out a week
Excellent explanation on various scenarios Markus. Question: why wouldn’t you sell Apple call below your cost basis? Lets assume you sell 100 strike, collect much higher premium, then there are two scenarios: price keeps dropping you collect that premium and reduce cost basis or price increases and you just roll out and up for a credit and still reduce cost basis. I think it is better than just waiting for a bounce. What do you think.
The problem with the wheel is that it leads to getting assigned at strikes that can easily end up in the wrong order. In other words, one will easily end up buying the stock at higher strikes than when selling it, missing great buying opportunities in the process.
There is some profit to be made at first, undoubtedly, but it is fairly modest with regards to the capital invested and the risk taken. If the wheel was that great strategy, then everyone would be doing it already.
All that said, it's always interesting to see how others trade and how they think. I always learn something useful. Thanks for that.
For most of people. holding SPY and selling occasional covered calls would beat more than 90% of active traders. For one thing, it’s real hard to beat index in the long run. Also after tax, buy hold is much better than active trading. And time spent on active trading is expensive too. If you have worked something else, you would have made a lot more money. I did trading more than 7 years profitably, seen many people, and got this conclusion. While I appreciate his sharing this info, it doesn’t need to be this complicated, not to mention risky for novice traders
Why dont you close a position before it is assigned? It would save a whole lot of headache and time
@@722guy the whole point of the wheel strategy is to get assigned..it is a plus...to sell calls.
@@bluesky5587 But then something like AAPL happens and now you have to wait and pray things turn around.
@sam chump My point is, if you can just buy SPY and sell calls once a month or something then you don't need to waste time for your active trading underperforming index, not to mention you have to pay taxes on your short term gains (fi you have any).
Any thoughts on selling covered strangles if you are assigned on you put option. Collect premium on both ends?
Ride is a bad choice. Good explanation
Thank you for watching!
I like this strategy you just leave your trade until expiration it's so simple. Unlike other option channel they are discussing IV rank, standard deviation, broken butterfly, and so on and on... is so difficult to follow complicated graphs.
Awesome! :) Thank you for your feefback.
That ride trade question aged well 😂😂... Would u want to keep RIDE premium or sell the 4700 shares and lose 8k ... We now know the answer 😂.. on a side note ur channel helped me a lot
doing options on AMD and Aapl now after 3 years....@202 and 165 strikes.....validates your point...good stocks go up significantly...just buy them if you get assigned and keep doing covered calls. What fo you think of etfs like SOXL to do options with including covered calls?
SOXL pays much more premium. That is my number one stock to sell a wheel on.
Marcus, would you recommend to sell put verticals instead of naked puts to save/optimize some capital? At the end not all of your positions will be assigned.
Nah.... the math. just doesn't work out. When you trade verticals, you are buying an insurance. that you don't need. 95% of the time. For me, that's wasting money. But every trader is different. Just do whatever works best for YOU. Selling cash-secured puts works well for me. 👍
"But we'll worry about this in just a moment" >> That's what I call keeping your head cold =D
You took a position in ride? I see you're a man of good taste, sub'd.
What is “ride”?
Why didn’t you buy to close the puts and roll them out farther out in expiration?
That would have been my preference!! Just roll the put forward and offset the loss to cover the put with the premium of the next put you sold!! That gives you more time for the underlying to move in your favor!! 😊
When you sell puts do you use cash or margin?
Why not sell the AAPL calls for small premium? Get paid a little to wait a week and try again. Or are you hoping for more premium early next week. Thanks
This is my question also. Why not sell AAPL cc at .30 Delta (or whatever; maybe go to .20 Delta for a position "underwater") to optimize income of that position at this time? If it gets called away, fine, sell CSP again next week. Sitting on the stock seems to expose you to more downside if we are headed into a bigger correction.
Markus made a judgement call here. He believes that AAPL will recover sufficiently for the next-Friday 133 calls to be worth something. IMHO, that is smoking a bowl of hopium. I think he should have rolled his 133 calls to the 128 strike, a delta of .24, where he would have collected $1.13 per share and have less than a 50% probability of touch. There is no reason why AAPL couldn't decline more. It has a +30 PE and pays a paltry .67% yield - why do you think Uncle Warrants is lightening his AAPL cart!? At the current dividend payout AAPL would have to go down to $41 to have a 2% yield - comparable to the other DOW and S&P stocks. This idea of avoiding "locking-in" a loss by selling a call below your assignment price is bogus. If he sold the 128 calls and they got called away - he would have recovered some $8 or $9 of a $13 loss and could turn around and sell puts again - and maybe AAPL would pay him back ... maybe.
@@alleneverhart4141 Yes, I wonder about selling calls underwater too. Perhaps selling underwater weekly calls and if the share price starts popping back up within striking distance, roll up and out... a cat and mouse strategy. Or would the mouse just get eaten? I might take that chance.
@@dukeofearlyretirement Yes. Markus collected a premium for selling a 133 put and another for selling a 133 call that expired worthless. His cost basis is around 131. So, it appears that the Markus strategy is to never book a trade that is a loss through the assignment mechanism. It's a bit specious but it kind-of works in terms of capital gains. If your'e in an retirement account where capital gains aren't really a concern then it's a different game.
In your first example with AMD GDX DBX RIDE AAPL, the cost to cover all those contracts would be close to 400k, are you playing with cash or using margin? How much margin? Can you cover how to use margin with options?
Yes, I use MARGIN, and I'm using the "standard" 2:1 margin for all my calculations, even though I have portfolio margin, which is 5:1.
I think we have a beautiful word in German for this type of investing: _Stillhaltergeschäfte_ (Yes, one word :)
Actually, I am quite curious to hear you speaking a couple of German words :D
He is German bro :)
@@eyoblibla3947exactly, that's the point, Bruder! 😅 A fellow German that I only know with his "English voice"
I believe from Spain not germany.
Hi,
Does it make sense to buy to close once you reach your max profit, before expiration date, to avoid
losses and getting assigned?
Are there any pros and cons to do this?
Thank you in advance!
Great question. I did a video explaining this topic last weeK. Take a look and let me know what you think: ua-cam.com/video/W7q_lD5DXng/v-deo.html
Does this help?
Would love to join your live chat on Monday if it's still going.
Hi Steve we have the webinar, you can register here loom.ly/nOOtotk
You use a 250k margin. What´s the interest you pay for this money and where do these expenses show up in your accounting? With regard to risk management, what happen´s when markets tank like they did in 2008; aren´t you afraid of blowing up your account? Thanks.
“Only when the tide goes out do you discover who’s been swimming naked” -Warren Buffett
Do you have a preference Covered Call or Cash secured Put?
What (if any) defensive actions would you take if it looked like you were being called away, more specifically if the stock shot up much higher and you were now (FOMO) missing out on those profits? Or does the wheel not care and banks the premium.
Roll up and out
I prefer the cash secured puts!!
Markus, on the AAPL trade why not sell calls below 133 for this increased premium if they become in danger of being exercised roll up and out? Any reason you don’t do this?
Not a bad idea. Just continue to collect premiums. Roll them forward!! 🙏
Markus, how much margin do you use when trading options?
I don’t use more than 20% (notional amount of underlying compared to entire portfolio).
But when you're assigned with AAPL won't you be paying the interest on your margin until the price rebounds and you get your covered call assigned at the cost basis?
But my stocks dipped too much and the selling of Calls provides very little premiums now. How do I fix this?
@sam chump ARKK and PLTR are my most recent bag holders. They keep going lower and lower.
This is the problem with the wheel ...we get into a down market which will happen for sure at some time ....and we all will be left holding stocks ..which is fine ...but all,premium income will cease ...... unless u sell calls at loss strikes to keep premium flowing ? Is that part of the wheel plan? Or is the plan to just sit it out and hold until recovery rolls around.
@sam chump hi Sam ... I must disagree .... look here with Apple ... markus is in a holding pattern ...and this is a small drop in market .... when or if we get a major correction ....and it is likely at some time ..... all stocks in a wheel will have to be held like apple here or sell calls and puts and get assigned with principal loss .... it will happen eventually ... so my take is make sure you sell options on stocks or better still etf like QQQ or SPY ... that you can happily hold for months or year and not sell massive premium on ...you could sell call way out of money and manage them so as to protect your shares .... plus do not be caught in margin as you will not have the luxury of waiting it out.
@sam chump thanks Sam ...I must check out UVXY...good to be prepared and have a plan like Markus suggests.