Why would you want to Buy Back Put and Call Options? - IMPORTANT For The Wheel Strategy
HTML-код
- Опубликовано: 10 июн 2024
- In this video, I'm going to show you an important reason why you would want to buy back put and call options.
A lot of people think that buying back these options is a waste of money, but I'm going to show you how it can actually be a very smart move. So if you're ready, let's jump right in!
First time here? Watch this video: go.rockwelltrading.com/StartHere
To get the transcript and MP3, go to: www.rockwelltrading.com/artic...
Today's Video will cover:
Intro 0:00
3 Steps to the Wheel Strategy 0:15
Real Life Example 0:40
Your 2 Choices 4:03
An Exception to this Rule...6:47
Learn more about our Trading software, the Power X Optimizer: bit.ly/PXOToday
Learn when and HOW to roll a covered call to maximize your profits here: • Rolling A Covered Call...
Recommended Links & Videos:
The "Wheel" Strategy Explained: bit.ly/3ePN4qT
How To Fly Rescue Missions: • Wheel Strategy Tips - ...
Wheel Book: www.rockwelltrading.com/the-w...
Trading with Margin: • Trading With Margin - ...
My Trading Routine: go.rockwelltrading.com/my-tra...
The Wheel Strategy explained in 15 minutes: www.rockwelltrading.com/coffe...
#StockMarket #OptionsTrading #TheWheelStrategy
Learn when and HOW to roll a covered call to maximize your profits here: ruclips.net/video/Da3dXfOvmiQ/видео.html
Thank you for sharing videos like this! Much appreciated and very informative
I am glad that this helps. ;)
excelelnt.
Great show, how did it result ?
Hi Daniel! You can watch my latest video here ruclips.net/video/Qq-rWNcfy18/видео.html
Do you sell Ride position?? How much lose in this
There’s times where it best to buy to close and take 75-90% of the profit now and open a new trade for next week which gives you more then a week for next expiration which should help you with theta decay and higher premiums and then buy to close earlier again if the opportunity is given I found this best because I can use less capital because if I want to make 1k a week but I usually require 40k in a weekly contract but if I have more then a week the premiums should be higher because there’s more time which means I don’t have to put as much down maybe 30k which manages my risk and going super huge on a trade .
Awesome! Thank you for sharing that here.
How would u handle a put which is deep in the money and it’s about to get assigned
This is what I do.
If it is a growth stock, with no dividends to consider, I roll a deep in the money put, rather than take assignment, and end up with stock shares I could not sell covered calls on.
ROLL=Buy to close the expiring, deep in the money put, for a loss, and simultaneously sell to open a new put, with a strike price, one strike price lower than the expiring put, and with an expiration far out enough in the future, to earn a credit that is LARGER than the cost of buying back the expiring put. This will result in a net credit. More cash in your account.
You get PAID to avoid assignment, on a strike price you are no longer happy with.
You get PAID to lower your capital at risk.
When a put is slightly in the money at expiration, use the Wheel Strategy.
When a put is deep in the money at expiration, roll down one strike price at a time, and out far enough for a net credit.
Keep rolling down one strike, and out farther, for net credits, until the put strike and the market price of the stock, are close enough to let it get assigned, and you can earn good premiums, by selling covered calls.
One thing to consider when choosing what to do with a deep in the money put, is whether the stock is a dividend stock, and whether the dividend is greater than the premiums you will earn while rolling. If the stock is a growth stock, with no dividends to pay you for holding the shares, it is a no-brainer, roll.
Knowledge IS power, ONLY if you apply that knowledge.
I agree with comment above. BUT, please don’t sell puts on stocks only for premium. Make sure you are ok buying the stock bc eventually you will get put those shares. Best of luck.
Another word is l like the song Role Role
@@thewheeldealstradingjournal
You are recommending that I not sell puts on stocks only for the premium. Why not?
Why will I eventually get those shares put on me?
I have a systematic, repeatable, and consistent put rolling strategy?
You sound just like me, a little over a year ago, when I used to exclusively use the Wheel Strategy.
I got in a long running debate with a guy who only stayed in cash, and only sold cash covered puts, and rolled them for net credits, when they became in the money.
He said he never allows the shares to be assigned to him, he always rolls instead.
At first, I couldn't wrap my head around WHY he always rolled, and not take assignment.
Then the stocks I owned turned downward, and I got stuck bag holding a lot of stocks that were so far below my purchase price, that I couldn't sell covered calls.
I had to bag hold for a long time, with no income, other than dividends every quarter.
Dividends are peanuts compared to the larger premiums earned by selling cash covered puts.
Thanks for your concern, BUT, I'll stay in cash, and sell cash covered puts, and roll them for net credits, that still earn more than dividends.
To your point about eventually owning the shares, you do have a point. On a few occasions, I have had puts exercised early, before expiration day, and got assigned.
To solve that problem, I quickly did the Share-Put Swap strategy.
If I got assigned the shares at the $100 strike, and the market value of those shares were down to $80, (for example), I would sell the 100 shares for $80, and simultaneously sell to open a new, in the money put with the $100 strike price, and out to an expiration date that earned me a premium of at least $20,25
Credit $8,000 for selling the shares,
Credit $2,025 for selling the put.
Total net credit of $10,025
I made an extra net $25 for doing the Share-Put Swap, and restored my account back to only having cash, and a cash covered put.
Having a good put selling strategy, doesn't prevent you from choosing falling stocks.
Having a good put ROLLING strategy, can save you from loosing money, on those falling stocks.
Best of luck, to you as well.
A rolling put, gathers no loss.
(Well, unless the stock goes bankrupt. In which case, you would also loose money owning the shares.)
@@thomasd5488 best of luck. :) happy trading/investing
I'm trying to understand how you would only make an additional $142 if you did nothing. I understand how you calculated it ($2 X 71) but I don't understand why this would happen. I've never traded options so I'm still learning some of the basics. Thanks again for all of the videos Markus! By the way, I hope your speaking engagements are going well!
In this scenario, Markus is referring to the $.02 cost to Buy-to-Close his position. ($0.02x100=$2.00 x71= $142). If he does nothing and lets the contract expire, he keeps the $142; however, if he closes at 90%, he has to give up the $142.
Minor Santa clause rally.
He needs more labourers like alot of companies.😄
S & P 3900
True.