How to Trade the Wheel Strategy

You just passed down the holy grail of trading. Great value 👏 Very excited to implement this strategy. Thank you!!

Does anyone know how the health of the presenter of this video is doing? Sorry I don't know his name.

Thanks Adam!

Hi Adam, thanks for putting so much time and effort into this to help others!!! I am in Canada and we can't use Webull or Robinhood as not available here...

Most excellent. thanks. Question. Why not move closer to ITM for the CSP and CC with a higher delta to get more premium and skip rolling? Getting called out fast allows one to be more nimble even though the theta is higher. In that way, you keep all the premium and the premium is higher. While there would be more churn in terms of buying and selling the stock which ties up more collateral, the profit grows higher faster. If done weekly...like or close to your example then profit rises faster. Yes? no? thoughts?

The downside of running the wheel is that potentially you'd be better off just owning the stock correct? So does it make sense to own 100 shares of a stock before running the wheel, so that you're hedged either way? Things are flat, you collect premium. Things are good your stock appreciates. Things are bad you're fuct, so maybe buy a LEAPs Put?

(New to all this)

Thanks!

When you roll a covered call aren't you going UP in strike price and out in expiration?

Hey how is your exit setup for option selling? Like when do you take profit and cut loss, in terms of percentage thanks

Nice tutorial, but one fundamental question. How do you know the wheel strategy returns better than just blindly buy and hold say spy or qqq? If they end up returning the same or just slightly better, it might not worth all the hassles. Don’t forget you will get a big tax bill by frequent trading.

What you're not saying is what if the stock dropped so much that the covered call you're gonna buy above your cost basis is way out of the money that it's pennies and what if you changed your money on the stock that it won't ever recover

You know you're a good person when you know you get something out of webull if people sign up but use it as a choice donation to support the channel rather than an AD.

It seems like this system would work best on volitile stocks that move sideways. I m thinking this is hard to not get assigned in a downtrend like now. Dec of 2022.

I feel this channel got a lot to offer...will find out.

Just found your site... Love it. thanks.

What is the beneift of selling the put when your capital requirements are the same if you write a covered call but you also get the dividend?

Adam what a fantastic explanation of the wheel strategy. I'm definitely not the first or only person to say this but you're a excellent teacher!

Great videos

Thanks for all your videos they have helped me a lot. I have a question, if I were to buy 100 shares of tesla or use the same amount of money and buy 2 or 3 contracts for the same value for a leap, which one makes more money?

Really dumb question, but just trying to understand, the profit from options is in collecting premiums and buying then selling the underlying stock? If you are doing this for options that expire 30-45 days, you're only going to collect a $300 (for example) premium once or twice a month (unless you have to roll the position?)? I guess I dont see how that would even be remotely worth it unless you're getting the underlying stocks at a significant discount and watch it miraculously go back up in price every single time

Unfortunately, the "go watch these" links were not there.

Rolling a covered call? No no no

Big up yourself Adam. I may get assigned some shares but this video took the fear out of it as we can still either roll out or if we do get assigned we can still recoup our losses via covered calls. and if the share price goes up we can still make a profit. Or if it gets a short squeeze.....Thanks again bruh I appreciate you.

I use this strategy to accumulate shares. As soon as I execute selling a put or a call, I use the premium to buy more shares.

Correct me if i'm wrong but the only reason one would want to sell calls above the cost basis rather than the strike price of acquisition is if the stock tanks completely. If you sell above your cost basis but below the strike price you purchased the stock at, you unnecessarily turned an unrealized loss into a realized loss. Completely illogical. Furthermore, I would never sell a put at a price I would not mind owning the stock at so I would not roll a put because that would decrease my premium income. If I find myself rolling a put, It must mean I chose a strike price NOT at a recent low. I think the only situation rolling a put makes sense is when it is obvious the stock is gonna crash way below the put strike price (an unexpected turn of events).

So if i hold till expired I'll just get premium and not stock?

I cannot believe this video doesnt have millions of views. This has helped me tremendously...

Great Video Adam, even years later. Just a question. The spread sheet only caters for 1 contract (100 shares). What would you do if you were doing the wheel strategy on 2 contracts (200 shares') I changed the formula on the section (Try to sell above) form this: =ABS(N1/100) to this: =ABS(N1/200) am I right? thanks again mate.

Glad to see you're well enough to respond to recent comments, still vids too. Hope you keep getting better. I've shared this sheet with someone new to trading this last week. I've been trading (holding selling CC mostly), but am just starting the wheel. Am confused about "commission per contract" box "N10" and how/why it effects column "L" the way it does ? All the way down. As it stands, I don't put anything there, because, it fills in all of column "L", which then adds to debits box "O2" which have not happened yet. It "M9" also says "<---This will factor into assignment, be sure to remove it as this is just stock commission", but one can not ever put a number there for reaons already stated. So whats it for ? The plan there ? I (via columns added and correct others affected due to my added columns) add comissions/fees and then subtract from premiums to factor my cost basis. I dont think it should fill column "L" but should take data from it as things are added. Am I wrong ? Thoughts ?

still use this spread sheet. absolutely awesome

Still the best options education available.

When selling cash secured puts and covered calls, should I be aware of earnings and dividend dates? Because I want the underlying price to be as flat as possible to avoid getting assigned.

By far, this is the best explanation of the wheel strategy

Can I use the same excel if I decide to sell my CSPs in the future with different strike? I should I start a new excel?

I'm not sure I completely agree that you never want to sell a Covered Call below your cost basis, not only can you use the loss for tax purposes, but the premium can sometimes make it an overall gain on the position.

You can get even more income doing this with dividend paying stocks

Is it acceptable to sell puts expiring before/after earnings? I want to capture the elevated premiums due to IV and don’t mind owing underlying at a discount.

Great video on a subject that can be hard to digest. You made it very easy to follow and understand. Thank you

You really deserve all the subs and views my man. Really appreciate these videos! Great job

Is the after 3 years strategy still good or is there a new / better one atm? Thx

You should usually wait until a share makes a low to sell the put, and a high to sell the call.
Otherwise the wheel just becomes a very sophisticated way of buying high and selling low.

Thanks!

why not immediately sell shares once assigned and just keep opening more puts? ima noob so sorry if this is a dumb question?

Are you talking about a put credit spread?

Question:

If my cost basis so far is $45 and a covered call at $45 nets a $.50 premium, and our goal is to offload these as fast as possible so we can get back to step one, wouldn't it be best to then sell a covered call at $42 for a $3.50 premium?

$42 is definitely under our current cost basis but with the $3.50 premium it would be the same, correct? Just with a higher probability of shares being called so we can return to step one!

Secured value is either held in secured cash account or assets, the difference is dividends if the underlying offers it, money market, or other collateralized assets; avoiding assignment via rolling merely cost profits