Get Your Copy of My Strategy Blueprints For FREE: 1) The Options Income Blueprint: optionswithdavis.com/blueprint/ 2) The Credit Spreads Blueprint: optionswithdavis.com/cs-blueprint/
Davis is right. Choosing fundamentally good stocks is important for the wheel strategy. I've been wheeling amazon, nvidia and microsoft for years, even through the bear markets and pandemic. And they have been very profitable for me. Thanks for enforcing the criteria for this strategy. Always love your clear explanations.
Do u think UA-camrs like , invest with Henry , etc .. have systems different than , Davis ? Or it’s just waste of money to pay for there mentorship ? Thx davis
Love this strategy! We sell covered strangles on 3X ETF’s(I know Davis doesn’t recommend these but they have been amazing income producers!) Normally we sell puts @ each 10% price drop & always make sure we have enough capital for roughly an 80% decline to be safe. Provides income at any level every month. We truly have not had a capital loss in over 3 years. Great video Davis!
@@BarryFence Currently we’re using MSOX(a 2X leveraged ETF on MSOS), YINN, SOXL, TQQQ, TNA & TSLT(our only single stock ETF- 2X on TESLA). Not concerned with Delta as we usually purchase the stock then sell calls close to the money(normally 1 month out) & sell puts @ a 10% lower level than our original purchase price. We expect to be assigned @ some point and are fine with that. If the ETF continues to decline we sell another cash secured put @ another 10% drop and continue to sell calls on the shares purchased. It’s a tiered covered strangle strategy. We simply move up & down with the market. The main goal for us is income with some capital gains. As Davis said, you must be comfortable owning more shares as the stock drops in value & you must have capital available for additional purchases. We currently earn close to 5% on sitting cash with Fidelity. Not concerned with the risk involved with 3X ETF’s as the likelihood of going to zero is minimal & the premiums are very high. Don’t mind the volatility as we are in it for long term. Let me know if you have any other questions. By the way , not financial advice, lol. Davis income grid videos are VERY good!
@@BarryFence We use MSOX, SOXL, YINN, TQQQ, TNA, UPRO & TSLT(the only single stock ETF we currently use on TSLA). We buy the stock and sell calls usually close to the money & simultaneously sell cash secured puts @ 10% less than our purchase price. It’s a tiered covered strangle where we always sell puts @ every 10% price drop. Not concerned with Delta as we expect to be assigned as the leveraged ETF’s are volatile. We just sell calls & puts at whatever current level the stock price is to collect monthly income. Always make sure we have enough capital to cover the puts to roughly 70-80% decline from our initial opening purchase. The cash set aside also earns close to 5% in Fidelity’s SPAXX account. Very comfortable buying more shares in a downturn as I’m not concerned with them dropping to zero. We always know ahead of time what price to sell puts at which takes out any guess work emotion. By the way, not financial advice, lol!
@@BarryFence We use SOXL, MSOX,TQQQ,YINN,TNA,UPRO & TSLT. Purchase shares @ current market price. Simultaneously sell covered call near or slightly out of the money & a cash secured put 10% below our purchase price. This is a tiered covered strangle where we sell puts @ every 10% drop in price from our original purchase. Capital needs to be set aside or available for each assignment. Fidelity’s SPAXX account pays around 4.8% for parked cash(including money set aside for cash secured puts). You’re basically averaging down every 10% drop & selling covered calls @ each appropriate level. Takes any guess work out of when to buy or sell, you know when the ETF hits a certain price what to do. We usually do 30-45 day expiration and adjust if necessary. We never roll or close early, just let them run to expiration . Check out Davis’s videos on Income Grid, very similar. Not concerned with Delta as we expect to be assigned
Thanks for sharing this Davis. I really liked that you emphasized on choosing the right underlying for criteria 2 because choosing wrong underlying in a bull market you will still lose money. But on the right underlying, even if it's a bear market, eventually my positions will be in profit. And criteria 3 is very smart! I wish you had released this video earlier so I wouldn't have to go through the pain in 2022 lol!
Another great video Davis! I really like your detailed explanations especially for a beginner like me that need the details for me to understand it. No one talks about options like you do. Your channel is one of the best as far as pertinent, detailed information. Thanks for sharing your knowledge and experience.
Great video. Some people could say that vertical means making 1/5 less money per time because if stock does not go down at all 4/5 of capital is locked as cash earning "small" interest but while that could be true short term and during uptrend long term it is better than loosing big. If you make 0.8% weekly on premiums using 1/5 capital that is 35% anualised. 35%/5 = 6% over total capital. Ideal way (if there is enough capital) is not only have enough for vertical spread but also horizontal (and each having vertical) but also do them in different sectors. And link it to quality that also pay dividends and yes capital gains. But there is nothing better than good night sleeps knowing that market crashing is ok. Plus every vertical that is below above one should seek higher capital gain return. Some people that want to play safe combine selling cash covered puts with buying protective puts. Some people buy >12months LEAPS at say -40% and play vertical only within -5 to -30%. Whatever the strategy is stick to it. One other rule. Your capital should never become to be needed for living. It must be money you can do without for 2 years.
Thanks @Davis. You mentioned about leveraged ETF such as TQQQ, do you think if this strategy works on these leveraged ETF, like TQQQ, SOXL, TNA? As these instruments have been in the market for more than a decade, and trending relatively consistent, I’m just not sure the impact of this “reset” in these leveraged ETF and how it will affect the wheel strategy. Hope to hear your feedback.
So I've been testing the wheel strategy against a buy and hold strategy. So far the buy and hold has outperformed the wheel strategy for me. By and hold is also much more tax friendly. Also it's hard to take advantage of dividends with a wheel strategy as you are always at risk of selling the stocks.
Maybe for a certain stock/index over a certain time. People back test to see how effective a certain strategy is. Would be interesting to see some more data on this
Hi , what do you think if you use an iron condor and move the strikes constantly to maintain a safe distance , do you think is a safe no lost strategy?
Thank you for your videos, they are very informative. Can you make a video about how to use the wheel strategy to make weekly/monthly income rather than waiting around to see if the underlying is oversold or overbought using the SPY. Thank you.
I do it with Wipro (indian IT company) I don't know if this is in your country as well. But strategy is very good. And wipro is an elephant stocks. Does not move so much but very good company
I’ve found that rolling is important. On a Tuesday or Wednesday, even if in the money, you can usually roll for credit. For really good premium. And layering in, many strikes, many expiration dates, and always keep powder dry.
I like to diversify with some commodities like UNG or USO that have liquid options chains. People also forget when your selling calls or puts….your making money every day no matter what. You’re getting paid just for time to go by…..don’t forget to consider that.
Hi Davis! I use enhanced wheel strategy now. I use bull put spread to replace the CSP but with my capital ready to accept assignment. The extra long put acts as my protection in case I decided not to accept the assignment. If I decide to accept the assignmrnt I just sell the long put early for extra profit. Same goes with the sell call, which I replace with bear call spread. The extra long call can give me an opportunity to earn extra premium in case the underlying shoot up. 😊
@@optionswithdavisI use basic bull put spreads and bear call spreads, not ratio spreads. I unwind the position when the underlying shoot up by taking off the long leg portion of the spreads early and accepting the assignment on expiry. Different than the strategies you explain in your video.
Just wondering for bull put spread, how has buying the insurance in the form of long put cost you? Or how far back do you buy the long put versus the sell put? And if it has been really useful for you? Thanks for reading.
From my understanding, usually all strong fundamental good stocks are higher price. Would you able to share which fundamental good stocks with lower price, that could using less capital for small account.
Hi Davis, thanks for the video, I'm a beginner and just hoping to clarify - we would need 4 x $ in our account to sell 4 CSP for vertical diversification?
You can also flip the strategy and sell naked calls on a stock you are long term short on. This also helps hedge the portfolio against whole-market ups and downs that can trigger a wave of assignments.
There are taxable short term capital gains on option premium. Even when called away at cost basis. A better term would be capital appreciation for calls OTM
Always love your great work. I used your strategy option grid on tesla 190 160 120 80. I got assigned on 190 already. Now I sell put 160 and sell call 200 and got 780$ premium. What do you suggest of that? What i am afraid of that is the stock will go over 200 within expiry. Now I lose 1200$. One thing i am concerned about is what to sell for call if stock go down to 135$ in this situation? Should i lower to 175 for next step or keep selling 185 or 190?
well, i was hoping for something i didn't know but its good.. i have done several times when i sell CC that the TA is bearish, i will sell several strikes ITM and it goes out the money..
Shown in these videos: 1) ua-cam.com/video/dt5DXt5G-T4/v-deo.htmlsi=aQnBqsk48RANNww1 2) ua-cam.com/video/c9RbaekCPt4/v-deo.htmlsi=foeWiD_ADI8pPpff 3) ua-cam.com/video/B2OGM9PZ2eo/v-deo.htmlsi=Wi98wLuiqW0cPuqb
im bag holding TSLA at $192 now for 7 weeks, maybe more.. i have been selling lower CC such as $180 even though my cost is at $192.. if i were to sell at $192, i get peanuts..
Davis, regarding probability.....Have Tasty, or you, done a study on :if you traded a .20 delta (for instance) credit spread ( with no other entry req's--ie. tech analysis, underlying, volatility-- over 100 trades, would you end up with an 80% W/L rate ??
If you add a long leap put for each contract you sell with the wheel strategy, I believe it can become riskless. Especially if you are trading the poormans covered call
you said "there's a certain strategy that if traded a certain way CAN actually give you no losses."..... this should summarise all. will check your video and then comment
Already mentioned in other videos: ua-cam.com/video/c9RbaekCPt4/v-deo.htmlsi=ztLLX5ZcdWS-c077 ua-cam.com/video/B2OGM9PZ2eo/v-deo.htmlsi=gr1U-o1dVg77frZx
Get Your Copy of My Strategy Blueprints For FREE:
1) The Options Income Blueprint: optionswithdavis.com/blueprint/
2) The Credit Spreads Blueprint: optionswithdavis.com/cs-blueprint/
Davis is right. Choosing fundamentally good stocks is important for the wheel strategy. I've been wheeling amazon, nvidia and microsoft for years, even through the bear markets and pandemic. And they have been very profitable for me. Thanks for enforcing the criteria for this strategy. Always love your clear explanations.
You're welcome!
Do u think UA-camrs like , invest with Henry , etc .. have systems different than , Davis ? Or it’s just waste of money to pay for there mentorship ?
Thx davis
Love this strategy! We sell covered strangles on 3X ETF’s(I know Davis doesn’t recommend these but they have been amazing income producers!) Normally we sell puts @ each 10% price drop & always make sure we have enough capital for roughly an 80% decline to be safe. Provides income at any level every month. We truly have not had a capital loss in over 3 years. Great video Davis!
Very nice & thanks :)
Hi Randy, Can you give more details about the strategy: underlying that you use, deltas, etc.? Appreciate it.
@@BarryFence Currently we’re using MSOX(a 2X leveraged ETF on MSOS), YINN, SOXL, TQQQ, TNA & TSLT(our only single stock ETF- 2X on TESLA). Not concerned with Delta as we usually purchase the stock then sell calls close to the money(normally 1 month out) & sell puts @ a 10% lower level than our original purchase price. We expect to be assigned @ some point and are fine with that. If the ETF continues to decline we sell another cash secured put @ another 10% drop and continue to sell calls on the shares purchased. It’s a tiered covered strangle strategy. We simply move up & down with the market. The main goal for us is income with some capital gains. As Davis said, you must be comfortable owning more shares as the stock drops in value & you must have capital available for additional purchases. We currently earn close to 5% on sitting cash with Fidelity. Not concerned with the risk involved with 3X ETF’s as the likelihood of going to zero is minimal & the premiums are very high. Don’t mind the volatility as we are in it for long term. Let me know if you have any other questions. By the way , not financial advice, lol. Davis income grid videos are VERY good!
@@BarryFence We use MSOX, SOXL, YINN, TQQQ, TNA, UPRO & TSLT(the only single stock ETF we currently use on TSLA). We buy the stock and sell calls usually close to the money & simultaneously sell cash secured puts @ 10% less than our purchase price. It’s a tiered covered strangle where we always sell puts @ every 10% price drop. Not concerned with Delta as we expect to be assigned as the leveraged ETF’s are volatile. We just sell calls & puts at whatever current level the stock price is to collect monthly income. Always make sure we have enough capital to cover the puts to roughly 70-80% decline from our initial opening purchase. The cash set aside also earns close to 5% in Fidelity’s SPAXX account. Very comfortable buying more shares in a downturn as I’m not concerned with them dropping to zero. We always know ahead of time what price to sell puts at which takes out any guess work emotion. By the way, not financial advice, lol!
@@BarryFence We use SOXL, MSOX,TQQQ,YINN,TNA,UPRO & TSLT. Purchase shares @ current market price. Simultaneously sell covered call near or slightly out of the money & a cash secured put 10% below our purchase price. This is a tiered covered strangle where we sell puts @ every 10% drop in price from our original purchase. Capital needs to be set aside or available for each assignment. Fidelity’s SPAXX account pays around 4.8% for parked cash(including money set aside for cash secured puts). You’re basically averaging down every 10% drop & selling covered calls @ each appropriate level. Takes any guess work out of when to buy or sell, you know when the ETF hits a certain price what to do. We usually do 30-45 day expiration and adjust if necessary. We never roll or close early, just let them run to expiration . Check out Davis’s videos on Income Grid, very similar.
Not concerned with Delta as we expect to be assigned
Absolute crime that you do not have more subscribers! Thank you, Davis, so much for all your knowledge!
I know 😭 You're very welcome ☺️
Thanks for sharing this Davis. I really liked that you emphasized on choosing the right underlying for criteria 2 because choosing wrong underlying in a bull market you will still lose money. But on the right underlying, even if it's a bear market, eventually my positions will be in profit. And criteria 3 is very smart! I wish you had released this video earlier so I wouldn't have to go through the pain in 2022 lol!
That's right. You're welcome!
Another great video Davis! I really like your detailed explanations especially for a beginner like me that need the details for me to understand it. No one talks about options like you do. Your channel is one of the best as far as pertinent, detailed information. Thanks for sharing your knowledge and experience.
You're welcome
Great video. Some people could say that vertical means making 1/5 less money per time because if stock does not go down at all 4/5 of capital is locked as cash earning "small" interest but while that could be true short term and during uptrend long term it is better than loosing big. If you make 0.8% weekly on premiums using 1/5 capital that is 35% anualised. 35%/5 = 6% over total capital. Ideal way (if there is enough capital) is not only have enough for vertical spread but also horizontal (and each having vertical) but also do them in different sectors. And link it to quality that also pay dividends and yes capital gains. But there is nothing better than good night sleeps knowing that market crashing is ok. Plus every vertical that is below above one should seek higher capital gain return. Some people that want to play safe combine selling cash covered puts with buying protective puts. Some people buy >12months LEAPS at say -40% and play vertical only within -5 to -30%. Whatever the strategy is stick to it. One other rule. Your capital should never become to be needed for living. It must be money you can do without for 2 years.
Thanks @Davis. You mentioned about leveraged ETF such as TQQQ, do you think if this strategy works on these leveraged ETF, like TQQQ, SOXL, TNA? As these instruments have been in the market for more than a decade, and trending relatively consistent, I’m just not sure the impact of this “reset” in these leveraged ETF and how it will affect the wheel strategy. Hope to hear your feedback.
My go to channel for information about options!
So I've been testing the wheel strategy against a buy and hold strategy. So far the buy and hold has outperformed the wheel strategy for me. By and hold is also much more tax friendly. Also it's hard to take advantage of dividends with a wheel strategy as you are always at risk of selling the stocks.
Maybe for a certain stock/index over a certain time. People back test to see how effective a certain strategy is. Would be interesting to see some more data on this
Hi , what do you think if you use an iron condor and move the strikes constantly to maintain a safe distance , do you think is a safe no lost strategy?
Davis, can you do a video on wheeling IWM please?
Thank you for your videos, they are very informative. Can you make a video about how to use the wheel strategy to make weekly/monthly income rather than waiting around to see if the underlying is oversold or overbought using the SPY. Thank you.
Here you go: ua-cam.com/video/PMEjvJ0FiBY/v-deo.htmlsi=CQ_BjWXBlE_tdUDt
I do it with Wipro (indian IT company) I don't know if this is in your country as well. But strategy is very good. And wipro is an elephant stocks. Does not move so much but very good company
I’ve found that rolling is important. On a Tuesday or Wednesday, even if in the money, you can usually roll for credit. For really good premium. And layering in, many strikes, many expiration dates, and always keep powder dry.
For the vertical diversification, do you put all the puts on at the same time, or step into it over time as the stock goes down?
See these:
1) ua-cam.com/video/dt5DXt5G-T4/v-deo.htmlsi=T7j7VwnF2gFVcYqD
2) ua-cam.com/video/c9RbaekCPt4/v-deo.htmlsi=npHZLAtO-Cm7YzWJ
I like to diversify with some commodities like UNG or USO that have liquid options chains. People also forget when your selling calls or puts….your making money every day no matter what. You’re getting paid just for time to go by…..don’t forget to consider that.
Hi Davis! I use enhanced wheel strategy now. I use bull put spread to replace the CSP but with my capital ready to accept assignment. The extra long put acts as my protection in case I decided not to accept the assignment. If I decide to accept the assignmrnt I just sell the long put early for extra profit. Same goes with the sell call, which I replace with bear call spread. The extra long call can give me an opportunity to earn extra premium in case the underlying shoot up. 😊
You mean this: ua-cam.com/video/euu_awAmiPY/v-deo.htmlsi=yV-El6AxHkV9stJe ?
@@optionswithdavisI use basic bull put spreads and bear call spreads, not ratio spreads. I unwind the position when the underlying shoot up by taking off the long leg portion of the spreads early and accepting the assignment on expiry. Different than the strategies you explain in your video.
Just wondering for bull put spread, how has buying the insurance in the form of long put cost you? Or how far back do you buy the long put versus the sell put? And if it has been really useful for you? Thanks for reading.
From my understanding, usually all strong fundamental good stocks are higher price. Would you able to share which fundamental good stocks with lower price, that could using less capital for small account.
PLTR, IONQ, ASTS
Hi Davis, thanks for the video, I'm a beginner and just hoping to clarify - we would need 4 x $ in our account to sell 4 CSP for vertical diversification?
How do you take losses in the wheel? For ex, do you set a rule to exit if the underlying moves % below your cost basis?
Please do an in depth video on vertical diversification
If i use IWM to do the wheel, vertical diversificación is still mandatory or with this ETF trend is always Bull like SPY, and i am going to be OK?
You can also flip the strategy and sell naked calls on a stock you are long term short on. This also helps hedge the portfolio against whole-market ups and downs that can trigger a wave of assignments.
Haha! The wheel is my first and favourite strategy that I am still deploying.
There are taxable short term capital gains on option premium. Even when called away at cost basis. A better term would be capital appreciation for calls OTM
Davis, I sell csp on good stocks only when they are in uptrend and pullback to the trend line support level or near 50 sma
Thanks for sharing
Always love your great work. I used your strategy option grid on tesla 190 160 120 80. I got assigned on 190 already. Now I sell put 160 and sell call 200 and got 780$ premium. What do you suggest of that? What i am afraid of that is the stock will go over 200 within expiry. Now I lose 1200$. One thing i am concerned about is what to sell for call if stock go down to 135$ in this situation? Should i lower to 175 for next step or keep selling 185 or 190?
Study Elliot waves.
but what DTE and deltas do yo use for the CSP and CC???
well, i was hoping for something i didn't know but its good.. i have done several times when i sell CC that the TA is bearish, i will sell several strikes ITM and it goes out the money..
Only trade wheel strategy on a stock which is above 50 n 200 sma and 50sma is above 200 sma
CSP wheel method need 100k for good fundamentals stock, think credit spread better less risk but lower gain
not necessarily. some good stocks under $100 (APLS, HOOD, PFE, etc.)
Was searching for wheel strategy, please explain it in visual that would be great.
Shown in these videos:
1) ua-cam.com/video/dt5DXt5G-T4/v-deo.htmlsi=aQnBqsk48RANNww1
2) ua-cam.com/video/c9RbaekCPt4/v-deo.htmlsi=foeWiD_ADI8pPpff
3) ua-cam.com/video/B2OGM9PZ2eo/v-deo.htmlsi=Wi98wLuiqW0cPuqb
im bag holding TSLA at $192 now for 7 weeks, maybe more.. i have been selling lower CC such as $180 even though my cost is at $192.. if i were to sell at $192, i get peanuts..
exactly
That is right. I always sell below cost basis if there is no premium to sell above cost basis. But always roll up and out when you are being tested.
that is wonderful news since tesla will be $2k in a few years.
Davis, regarding probability.....Have Tasty, or you, done a study on :if you traded a .20 delta (for instance) credit spread ( with no other entry req's--ie. tech analysis, underlying, volatility-- over 100 trades, would you end up with an 80% W/L rate ??
See this: ua-cam.com/video/lQ1eHivY_dc/v-deo.htmlsi=0s-fsWIumHz_c9z5
If you add a long leap put for each contract you sell with the wheel strategy, I believe it can become riskless. Especially if you are trading the poormans covered call
"Finally breakeven when you get your pension" 😅🤣
Short put with selling call?
Tqqq never went up that high. From my knowledge it went up 63 ish highest.
you said "there's a certain strategy that if traded a certain way CAN actually give you no losses."..... this should summarise all. will check your video and then comment
Too bad that Davis is missing to tell us some important facts, like:
DTE and Delta for Short Puts and Short Calls
Already mentioned in other videos:
ua-cam.com/video/c9RbaekCPt4/v-deo.htmlsi=ztLLX5ZcdWS-c077
ua-cam.com/video/B2OGM9PZ2eo/v-deo.htmlsi=gr1U-o1dVg77frZx