I sold a Put on a stock a few days before earnings, when it's volatility was jacked up high; I got a good premium. After earnings came out, the stock’s price dropped, and my short Put went ITM. Usually when a short put goes ITM you lose money on the trade, but in this case my short put remained profitable because Put prices dropped along with the drop in volatility after earnings. Then I rolled the ITM Put to the next month, and the stock’s price started rising again. That was a double whammy trade!
Been constantly selling calls on CCJ for around 2 1/2 years. The original cost basis is $8.07. ($6,456) I have netted $12.41 in covered call income. 800 shares x $12.41= $9,928. The latest 8 contracts expire on Friday (8/19) at $25. Today the stock is at 25.45 it would cost .96 to buy back the option. I received $1.47 when I sold the call. I will probably wait until Friday to buy back the position or hopefully, it closes under $25 and expires worthless. Either way, I will sell 8 Sept. 16 contracts. I feel in a no lose situation here. Since I have no cost basis anymore.
Well done Dave. Thank you. I've been selling weeklies, but now will switch to monthlies as suggested by you. Also, I will start selling ATM to maximize income, both Puts and Calls, and take the risk of being exercised or assigned. It's part of the Wheel game anyway. Let's see how the result comes out to be in 6 months.
Great channel! I discovered the wheel strategy just a month ago, and my first experience is absolutely stunning (with the S&P only going back up 😂). I know, too soon to tell, but this seems awesome.
I dont know about the wheel strategy in a bear market. You get in trouble real easy without buying put protection. This might reduce your yield. I really can see rally to 50% below from where we are now. So I do this but only buying weekly options. Just dont have tolerance for beyond that right now. Really like the video and your willingness to share your trades. pretty cool
Hi Raad. I don't have a lot of confidence at the moment either. I'm picking my spots but trying to maintain a solid cash position. Also, since I may be completely wrong, I continue to dollar cost average into the market a little each week. Good luck and thanks for watching.
Glad a stumbled on to your channel. I’ve been selling puts for income awhile now and selling calls when put. My biggest success so far is also a big opportunity cost. Selling puts in MSTR has been very good, lots of premium. I was finally put at 202.50. It tanked. But I sold calls. Rolled up and out. It will get called away at $200. The good news I collected almost 9k in premium. The bad news, I would be up 15k without the call. But it’s a good win.
A week before Amazon's earnings, I sold a covered call at $130, my cost basis. Ouch. Talk about missed opportunity and poor timing haha. Felt bad seeing my shares soar in value, but having them locked as collateral because i wanted that $240 premium at the time. Really did think it would go down. Market can be very inconsistent with bad/good reports.
I really appreciate the strategy you brought up in a different video where you commended selling covered calls in the money a little bit. I'm going to incorporate that as the one part of the wheel strategy that really messes with your brain is when the underlying just dumps real hard below your cost basis and you have to chase it. I like the idea of setting yourself up at the start to mitigating that possibility.
Hi. If you are focused on income generation with reduced risk, I think this is a solid strategy. Should provide more wins versus selling ATM or OTM. Good luck!
To increase odds in selling CCs and CSPs, I generally only sell CCs on strong Green Day’s, and sell CSPs on strong red days (or consistent red days). Even if it gets called away, or obligated to buy shares at the strike price chosen, I’ll have optimized my premium collection(s).
I think it's interesting that you choose companies with less volatility. I tend to try sell options on more volatile stocks, I'll have to experiment with lower beta stocks in my paper trading account.
Hey Pete. My order of operations puts volatility toward the bottom. Plus I tend to target a return from an OTM put or call so on more volatile stocks I go further OTM.
Hi Dave! I'm with you on curtailing put selling options right now. The market is very over sold and back into over-valued territory. Also, I still have tons of puts still open that I had to roll out just a few months ago. Now many of my call options are ITM and I'm having to roll those out too. This is my first year of trading options and I think the crazy market has certainly been helpful in learning how to sell and manage options.
Yes. In generalI’m with you. My only sold put is on SNAP, but I’ll probably get out of it today for a two day hold. It has a pretty good resistance at $10. I’ll wait for a down trend to consider re-entertaining selling a put.
Dave, as always, thanks for the great videos. You mentioned Wash Sale, and I'd love to see a video dealing with any Wash Sale avoidance tips that you might have, including any trade tracking software that might warn of a potential wash sale. Btw, the Orlando Money Show schedule is out. No presenters from Tastytrade, so I'm going to pass. Hope all your short deltas are shrinking.... Kevin
Hey Kevin. Fidelity does a decent job of tracking and showing any wash sales. So does Etrade. Main thing is to avoid 30 days before and after selling a stock so if something gets called away I go out 5 weeks or more on a following put. Not great but I did this video that has a bit of info: ruclips.net/video/h66c1qz0h_A/видео.html I may still end up at the Orlando Money Show... good excuse to head to a warmer climate in October!
Hi Dave; you are one of the best at explaining options. I'm very new and have 6 or 7 positions (all put options) that expire on Friday - with no chance they'll get put to me with this rally. I am anxious to see where I land with the total premium when they expire. I've been wildly conservative when selling the put option - way out of the money - but this strategy shows how I can get closer to the money and just spin the wheel. Thanks.
Hey Ronald. You had good timing on those first puts. What you collected when you sold them is all yours assuming they expire OTM. Selling closer to the stock price will add premium... and risk. Keep it going! Cheers.
This is super helpful, thanks for the videos, Dave! I am new to options, so this is probably an obvious answer ... but why don't people just run the wheel strategy by selling a low volatility stock or ETF a couple days out, collect premiums, and it would be very unlikely that the value on the underlying asset could run away from you too much either way?
Hi. People do exactly that but even low volatility stocks can move dramatically. For someone new that wants to try it out, pick a stock you want to own long term and sell an OTM put (or paper trade). Either you pick up a premium payment for selling the put or you end up buying (or closing) 100 shares of a stock you want at a price you want... and picking up the premium.
Extremely interested in this topic but have no idea where to start educating myself. Do you mind pointing me in the right direction to begin learning about this? Thanks so much in advance
Hi Fabiano. Here are some basics that may help: ruclips.net/video/4agbxqlS1oA/видео.html or ruclips.net/video/wjzQg0lWUrc/видео.html Also have one of my early videos. A little rough but may help to understand: ruclips.net/video/ggIpIfgNkRY/видео.html I need to do an updated option intro video!
Dave....tks You talk pretty fast.....like you've done options for awhile....I have just owned mutual funds....bought BRK.B in 2015.... but only bought 220 shares... sorry about that.....Im thinking of neutral trades and trading....Td Ameritrade only approved me for Level 1....Can only write cash secured puts and stock secured calls.....I was told I could write SEC to try to get TD Ameritrade to approve me for Level 2.....so I could buy the wings ....I would feel safer buying to cover the short puts and calls......rather than covering with the stock I own.....in case of a gap up or down.....Now Im thinking of selling ATM put and calls.....that way the credits should far exceed the daily move in the stock....Like ditm deep in the money..... appreciate your thoughts.. selling on each side.to get the max credit. Even if forced to buy I should be Ok. As credits should exceed stocks movement .tks Jim
Hmmm i do about 5000 trades a year...i strongly recommend backing up the wheel with longs...look at the volatility of META and TGT...seemingly good companies that you can get slammed with the unpredictable volatility of individual issues
@@wealthadventures yes, atm always cause highest premiums also per Taleb over priced sale, then a long 5 points lower or higher or even long /short shares small safe returns weekly, slow and steady wins the race!
Thank you for the videos! I've been doing the wheel strategy for a while now. Do you have more advance strategies for the wheel? For example, like rolling it out especially if I do not want to get assigned to the put/call?
Hi Shy. I recently did a general video on rolling out options. It would relate to this idea: ruclips.net/video/dS7LsbPsf7U/видео.html Hope it helps! If you have anything specific just ask. Good luck!
Great video Dave as always. I like the stocks on your list. I've been having pretty good success with AAL (American Airlines) and LMND (Lemonade). I ran into TSN (Tyson Foods) by accident when I was checking out TSM from your list. Could be worth looking at. Added Pfizer to my watch list as well. Thanks
Hello Dave, I just subscribed! Question, in a bear market like we have now selling puts is not an option (no pun intended! 😁) OR IS IT? What's the opposite of that? And if you own a stock to sell calls you'd STILL be losing! Then what? Thanks much in advance for your answer!
Hi. I have lots of open puts at the moment. I tend to sell longer expiration and lower strikes in a low VIX environment like this when I do. Especially since cash is paying about 5%. The opposite side would be buying puts or selling calls. I also have some shorter duration debit put spreads that are working at the moment. You don't HAVE TO own the stock to sell a call but it is advised while you learn. Hope that helps!
You are an affiliate for SeekingAlpha. I encourage everybody to sign up for Seeking Alpha. It has made me money in all market conditions. Your discount is a great deal. SA helps when you run the wheel strategy. Tipranks is another site to explore.
Hi. I would say that selling options can provide some income but, unless you have a sizeable account to lean upon, it is hard to replace income from a job using options. I target 12% annually so 100k would be 12k/yr. Some years better, some years worse.
Don't risk your entire account. Keep enough in reserve to recover, should the market take a dump. I usually only trade 1/3 of my account, but made 18% on that third last yr.
Thanks for providing this great content. Could you explain something that’s a bit of a paradox? Why do you try to avoid getting assigned on the put side of the wheel if you want to own the stock anyway? There is more money to be made on covered call side of things. Wouldn’t you start with an ATM put if you really want the underlying?
Hi. I would say it depends on your view of the underlying. For example, I don't really want to own SPY so I would start selling an OTM put for the income. I would continue to roll down until I could not hit my income goals before assignment.
Understood and thanks for the reply. SPY does have some trading advantages through liquidity and diversification. I was thinking about managing 2 contracts simultaneously at the same expiration. This would start with a CSP that’s ATM and one OTM. Then if I get assigned on one I’ll have a fully covered strangle and if I get assigned both I can hopefully do a CC ATM and one OTM. Does this sound like a reasonable strategy or am I making things too complicated? I realize this ties up a lot of money on spy.
@@DC-nb5du Start paper trading it and see. SPY options boil down to direction and volatility. If we are trying to strip off income we need to manage the direction and the volatility. I tend to start OTM so that I can "cover more ground" with directional swings and volatility.
Thanks for your videos! I did the wheel strategy on QQQ. I profited some ($350) last week. However, now it’s going back up and I’m not sure if selling puts will work. For educational purposes, do you think QQQ is a buy at $330? Or should I keep selling puts till it goes back down if it will ever do? Thanks alot!
Hi Noha. I'm surprised by the recent rally. I do have 100 shares of QQQ with a sold call at 300 that expires on 8/26. Good news is that I am positive on the trade at that 300 call. Bad news is that I missed out on this rally. At the current price or if it continues to climb I will probably let the shares go. If QQQ falters and comes back toward my strike I will probably roll it straight out. Similarly, if I did not own shares, I would look at selling a PUT around that 300 price. Good luck and thanks for watching!
I love this series so much, man. I can't thank you enough Dave, you rule. I so want to start the "wheel" but I've been concerned about selling Puts right now due to.. you nailed it. Not super confident in the market rally at this time. I don't pick highs and lows but what do when your gut says "just buy more JEPI" if anything?.. sell a put instead and collect $30? I've been very happy with HDV and JEPI this past year. Perhaps I start mid-wheel with what I already have like JPM and CVX and start with a Call to start the wheel? Thoughts?
Hey Jeff! Thanks for the support. Appreciate it! You can start with a call for sure. If you like your position in JPM and CVX but are bearish on the market, sell an OTM call to collect some premium. You can also look at selling a put but if you are bearish it makes sense to watch until you like the market or a certain stock looks attractive. JEPI and JEPQ are always available if you are looking for income and want to dollar cost average into them.👍
@@wealthadventures I have an Option (CTRA Sept 9, $30 Put). Sell to Open. It's dropped below that. It's at $29. What are my options for this situation? Anything I can do before Sept 9? I'd like the stock, but cheaper if possible...? Help, thanks! Etrade customer service useless, thanks!!
@@CGroovy1975 Hi Jeff. Since you would like to buy it for less, have you looked at rolling out the option? It looks like you could roll out and down to a 29 Sept 30th exp for a small credit. It would look like this: Buy to close 30 9/9 expiration (Debit ~$115), sell to open 29 9/30 expiration (Credit ~$140) for a net credit around $25. Just 1 example but that would save you $100+$25 per contract since you are rolling it down. You could also go our further for more credit but also more exposure to time.
Unfortunately it's saying I don't have funds available to cover the new Sell to Open (I closed the other one). "Buy 1 CTRA Sep 09 '22 $30 Put Expired" Need a day to settle? Thanks again!!
Hi. I like MRVL but still a little expensive for me in this market. I have not looked at SE. Premiums come from volatility but I try to ignore the premium while I shop for a good trade. So if you like MRVL at the current price and you can sell a PUT at a price you like to meet your goal... that may be the trade for you. In other words, the premium comes last in my opinion.
recently my friend had to keep re rolling his put to a future expiration but somehow he was assigned with a week left on expiration. so re rolling doesn't always work.. you will be assigned one way or another..
@@wealthadventures no, my friend didn't like the strike price thats why he kept re rolling.. i still find it odd that only 7 of the 10 contracts were assigned leaving 3 still open.
@@josephsaeteurn9158 Assignment is random. If someone executes a contract the Options Clearing Corp randomly selects and bang... someone gets assigned.
Hey Dave I saw that you sell options on O. I have never sold options before but I am close to 100 shares of O is it at risk of getting called because of the monthly dividend?
Hi Rex. I have owned my shares of O for awhile now. I sell OTM calls for the most part that allow me to collect a small "extra dividend" but still keep my shares. My strike price has not been tested lately for sure!
Hi Dave what is the relative profit difference between selling monthly expiring options versus yearly expiring options as far as premium goes putting assignment risk aside? I know it's different for each stock but what is roughly the average difference. I am trying to figure out whether the hassle of managing monthly positions is worth the extra effort versus a yearly position.
Hello. It does depend on the underlying but ballpark around 2:1 (12 monthly ATM call options should be about double 1 yearly ATM call). On some larger positions I do sell yearly options with a few contracts. You will also close out monthly options after 1,2, or 3 weeks at times and roll for additional income vs a yearly option that I will sometimes close after 6-9 months. Definitely less work! Good luck!
Hi Brian. My opinion is no. However, I have not used the Russell for much myself so not speaking from experience. Plenty of volume and I don't see a reason to say no.
Hi. That is true and you can begin that way if you like. I look for certain conditions when I do sell a put and call. I did a video on strangles not long ago: ruclips.net/video/wzVozM9qG54/видео.html It really depends on the market IMO. For example, I'm not interested in selling PUTs right now but calls are starting to look attractive.
Hi. Not sure about your situation but I have sold calls against all my shares at this point. Last week was a great rally but I'm not confident that it will continue. Just my opinion!
@@wealthadventures Been challenging this year. The vix is high so the money has been good, but the highs have been high and lows low so it's really been difficult to make steady money. Lots of calls getting assigned itm.
@@adamnorthville5636 Yes. It was been hard to decide between sticking with a bad trade that is deep ITM and producing little income or letting it go and jumping into a different position. I think it is all coming back to me so still rolling out most of my calls.
Hey Andrew. This is from Fidelity. Pretty easy to use but with some drawbacks. A few screens are buried but overall I like it. Also use Etrade which I like. I think if I could pull the best of both you could have 1 great platform.
@@AndrewMatias Minor issue but I would like to see option chains at the time of a trade. You need to pull additional screens to find it. Not a big deal and solid overall.
I sold a Put on a stock a few days before earnings, when it's volatility was jacked up high; I got a good premium. After earnings came out, the stock’s price dropped, and my short Put went ITM. Usually when a short put goes ITM you lose money on the trade, but in this case my short put remained profitable because Put prices dropped along with the drop in volatility after earnings. Then I rolled the ITM Put to the next month, and the stock’s price started rising again. That was a double whammy trade!
IV crush is real.
Been constantly selling calls on CCJ for around 2 1/2 years. The original cost basis is $8.07. ($6,456) I have netted $12.41 in covered call income. 800 shares x $12.41= $9,928. The latest 8 contracts expire on Friday (8/19) at $25.
Today the stock is at 25.45 it would cost .96 to buy back the option. I received $1.47 when I sold the call. I will probably wait until Friday to buy back the position or hopefully, it closes under $25 and expires worthless. Either way, I will sell 8 Sept. 16 contracts. I feel in a no lose situation here. Since I have no cost basis anymore.
Hey Kurt! Nice. Free stock is hard to beat. 😂 Great situation.
Well done Dave. Thank you. I've been selling weeklies, but now will switch to monthlies as suggested by you. Also, I will start selling ATM to maximize income, both Puts and Calls, and take the risk of being exercised or assigned. It's part of the Wheel game anyway. Let's see how the result comes out to be in 6 months.
Hey Huan. Good luck! Selling ATM adds risk and reward. It starts to become a volatility play. Check out short strangles and straddles as well.
Great channel! I discovered the wheel strategy just a month ago, and my first experience is absolutely stunning (with the S&P only going back up 😂). I know, too soon to tell, but this seems awesome.
Hey. Thanks for watching! Nice to hear that first trade is working out. Keep it up and good luck!👍
I dont know about the wheel strategy in a bear market. You get in trouble real easy without buying put protection. This might reduce your yield. I really can see rally to 50% below from where we are now. So I do this but only buying weekly options. Just dont have tolerance for beyond that right now. Really like the video and your willingness to share your trades. pretty cool
Hi Raad. I don't have a lot of confidence at the moment either. I'm picking my spots but trying to maintain a solid cash position. Also, since I may be completely wrong, I continue to dollar cost average into the market a little each week. Good luck and thanks for watching.
Thank you. Learning so much. Using your spreadsheet.
Hi Andrew. Welcome! Glad it is helping and thanks for watching.
Good tooob Dave... well explained and no get rich quick bs.
Regards from Australia.
Thanks! Appreciate it. Cool to hear someone is watching from the other side of the globe! Australia is still on my bucket list.
Glad a stumbled on to your channel. I’ve been selling puts for income awhile now and selling calls when put. My biggest success so far is also a big opportunity cost. Selling puts in MSTR has been very good, lots of premium. I was finally put at 202.50. It tanked. But I sold calls. Rolled up and out. It will get called away at $200. The good news I collected almost 9k in premium. The bad news, I would be up 15k without the call. But it’s a good win.
Hey Grant. Wow! Wild ride. MSTR has been all over the board. Congrats on the win.
A week before Amazon's earnings, I sold a covered call at $130, my cost basis. Ouch. Talk about missed opportunity and poor timing haha. Felt bad seeing my shares soar in value, but having them locked as collateral because i wanted that $240 premium at the time. Really did think it would go down. Market can be very inconsistent with bad/good reports.
Hi. And here we are again back at $130. A win is a win. Keep it going!
I really appreciate the strategy you brought up in a different video where you commended selling covered calls in the money a little bit. I'm going to incorporate that as the one part of the wheel strategy that really messes with your brain is when the underlying just dumps real hard below your cost basis and you have to chase it. I like the idea of setting yourself up at the start to mitigating that possibility.
Hi. If you are focused on income generation with reduced risk, I think this is a solid strategy. Should provide more wins versus selling ATM or OTM. Good luck!
To increase odds in selling CCs and CSPs, I generally only sell CCs on strong Green Day’s, and sell CSPs on strong red days (or consistent red days).
Even if it gets called away, or obligated to buy shares at the strike price chosen, I’ll have optimized my premium collection(s).
I like it. Patience has certainly helped me with wheeling stocks.
I think it's interesting that you choose companies with less volatility. I tend to try sell options on more volatile stocks, I'll have to experiment with lower beta stocks in my paper trading account.
Hey Pete. My order of operations puts volatility toward the bottom. Plus I tend to target a return from an OTM put or call so on more volatile stocks I go further OTM.
Hi Dave! I'm with you on curtailing put selling options right now. The market is very over sold and back into over-valued territory. Also, I still have tons of puts still open that I had to roll out just a few months ago. Now many of my call options are ITM and I'm having to roll those out too. This is my first year of trading options and I think the crazy market has certainly been helpful in learning how to sell and manage options.
Hey Peter. This has been a challenging year for trading options this way. Hang in there! And keep collecting that time.👍
Yes. In generalI’m with you. My only sold put is on SNAP, but I’ll probably get out of it today for a two day hold. It has a pretty good resistance at $10. I’ll wait for a down trend to consider re-entertaining selling a put.
Dave, as always, thanks for the great videos. You mentioned Wash Sale, and I'd love to see a video dealing with any Wash Sale avoidance tips that you might have, including any trade tracking software that might warn of a potential wash sale. Btw, the Orlando Money Show schedule is out. No presenters from Tastytrade, so I'm going to pass. Hope all your short deltas are shrinking.... Kevin
Hey Kevin. Fidelity does a decent job of tracking and showing any wash sales. So does Etrade. Main thing is to avoid 30 days before and after selling a stock so if something gets called away I go out 5 weeks or more on a following put. Not great but I did this video that has a bit of info:
ruclips.net/video/h66c1qz0h_A/видео.html
I may still end up at the Orlando Money Show... good excuse to head to a warmer climate in October!
Wheel strategy rules! It's my main strategy that I use on a weekly basis.
Hi. I'm in that camp.👍
Hi Dave; you are one of the best at explaining options. I'm very new and have 6 or 7 positions (all put options) that expire on Friday - with no chance they'll get put to me with this rally. I am anxious to see where I land with the total premium when they expire. I've been wildly conservative when selling the put option - way out of the money - but this strategy shows how I can get closer to the money and just spin the wheel. Thanks.
Hey Ronald. You had good timing on those first puts. What you collected when you sold them is all yours assuming they expire OTM. Selling closer to the stock price will add premium... and risk. Keep it going! Cheers.
This is super helpful, thanks for the videos, Dave! I am new to options, so this is probably an obvious answer ... but why don't people just run the wheel strategy by selling a low volatility stock or ETF a couple days out, collect premiums, and it would be very unlikely that the value on the underlying asset could run away from you too much either way?
Hi. People do exactly that but even low volatility stocks can move dramatically. For someone new that wants to try it out, pick a stock you want to own long term and sell an OTM put (or paper trade). Either you pick up a premium payment for selling the put or you end up buying (or closing) 100 shares of a stock you want at a price you want... and picking up the premium.
Great video Dave thank you!
Thanks! Appreciate it.
Extremely interested in this topic but have no idea where to start educating myself. Do you mind pointing me in the right direction to begin learning about this? Thanks so much in advance
Hi Fabiano. Here are some basics that may help:
ruclips.net/video/4agbxqlS1oA/видео.html
or
ruclips.net/video/wjzQg0lWUrc/видео.html
Also have one of my early videos. A little rough but may help to understand:
ruclips.net/video/ggIpIfgNkRY/видео.html
I need to do an updated option intro video!
@@wealthadventures fantastic, thanks so much.
Dave....tks
You talk pretty fast.....like you've done options for awhile....I have just owned mutual funds....bought BRK.B in 2015.... but only bought 220 shares... sorry about that.....Im thinking of neutral trades and trading....Td Ameritrade only approved me for Level 1....Can only write cash secured puts and stock secured calls.....I was told I could write SEC to try to get TD Ameritrade to approve me for Level 2.....so I could buy the wings ....I would feel safer buying to cover the short puts and calls......rather than covering with the stock I own.....in case of a gap up or down.....Now Im thinking of selling ATM put and calls.....that way the credits should far exceed the daily move in the stock....Like ditm deep in the money..... appreciate your thoughts.. selling on each side.to get the max credit. Even if forced to buy I should be Ok. As credits should exceed stocks movement .tks Jim
Hi. Any questions, let me know! Start small and see what works for you.
Hmmm i do about 5000 trades a year...i strongly recommend backing up the wheel with longs...look at the volatility of META and TGT...seemingly good companies that you can get slammed with the unpredictable volatility of individual issues
Hi Mark. I know all about META this year... Fun stuff! So spell it out are you starting with a put spread?
@@wealthadventures yes, atm always cause highest premiums also per Taleb over priced sale, then a long 5 points lower or higher or even long /short shares small safe returns weekly, slow and steady wins the race!
@@marksoberay2318 Interesting! Thanks for sharing. I always like to hear where others are having success. I'll dig in to it a bit.👍
Thank you for the videos! I've been doing the wheel strategy for a while now. Do you have more advance strategies for the wheel? For example, like rolling it out especially if I do not want to get assigned to the put/call?
Hi Shy. I recently did a general video on rolling out options. It would relate to this idea:
ruclips.net/video/dS7LsbPsf7U/видео.html
Hope it helps! If you have anything specific just ask. Good luck!
@@wealthadventures to do this strategy u need some capital or else u wont b able to do it tho right?
@@Eastbaypisces Yes. You do need to have some money to buy enough shares to cover the option contracts.
Great video Dave as always. I like the stocks on your list. I've been having pretty good success with AAL (American Airlines) and LMND (Lemonade). I ran into TSN (Tyson Foods) by accident when I was checking out TSM from your list. Could be worth looking at. Added Pfizer to my watch list as well. Thanks
Hi James. Thanks for sharing. I will check it out. Good luck!
I was hoping you would continue talking about wash sales.
Hi David. I talk about wash sale rules in this video:
ruclips.net/video/h66c1qz0h_A/видео.html
Might help!
Hello Dave, I just subscribed! Question, in a bear market like we have now selling puts is not an option (no pun intended! 😁) OR IS IT? What's the opposite of that? And if you own a stock to sell calls you'd STILL be losing! Then what? Thanks much in advance for your answer!
Hi. I have lots of open puts at the moment. I tend to sell longer expiration and lower strikes in a low VIX environment like this when I do. Especially since cash is paying about 5%. The opposite side would be buying puts or selling calls. I also have some shorter duration debit put spreads that are working at the moment.
You don't HAVE TO own the stock to sell a call but it is advised while you learn. Hope that helps!
@@wealthadventures Thanks much for your answers Dave! All the best!
You are an affiliate for SeekingAlpha. I encourage everybody to sign up for Seeking Alpha. It has made me money in all market conditions. Your discount is a great deal. SA helps when you run the wheel strategy. Tipranks is another site to explore.
Thanks James!
I'm gonna start selling options in to eventually replace my income is the plan Any vids words of encouragement for that?
Hi. I would say that selling options can provide some income but, unless you have a sizeable account to lean upon, it is hard to replace income from a job using options. I target 12% annually so 100k would be 12k/yr. Some years better, some years worse.
@@wealthadventures 10 to 22 % is my goal
@@nnrq822 👍
Don't risk your entire account. Keep enough in reserve to recover, should the market take a dump.
I usually only trade 1/3 of my account, but made 18% on that third last yr.
Thanks for providing this great content. Could you explain something that’s a bit of a paradox? Why do you try to avoid getting assigned on the put side of the wheel if you want to own the stock anyway? There is more money to be made on covered call side of things. Wouldn’t you start with an ATM put if you really want the underlying?
Hi. I would say it depends on your view of the underlying. For example, I don't really want to own SPY so I would start selling an OTM put for the income. I would continue to roll down until I could not hit my income goals before assignment.
Understood and thanks for the reply. SPY does have some trading advantages through liquidity and diversification. I was thinking about managing 2 contracts simultaneously at the same expiration. This would start with a CSP that’s ATM and one OTM. Then if I get assigned on one I’ll have a fully covered strangle and if I get assigned both I can hopefully do a CC ATM and one OTM. Does this sound like a reasonable strategy or am I making things too complicated? I realize this ties up a lot of money on spy.
@@DC-nb5du Start paper trading it and see. SPY options boil down to direction and volatility. If we are trying to strip off income we need to manage the direction and the volatility. I tend to start OTM so that I can "cover more ground" with directional swings and volatility.
Got it. I’ll start slowly with this strategy. Can you do a video some time on when you use margin and how to evaluate the risks? Thanks
@@DC-nb5du I can take a look. I really do not use margin which limits what I trade... but also reduces risk.
Thanks for your videos! I did the wheel strategy on QQQ. I profited some ($350) last week. However, now it’s going back up and I’m not sure if selling puts will work. For educational purposes, do you think QQQ is a buy at $330? Or should I keep selling puts till it goes back down if it will ever do? Thanks alot!
Hi Noha. I'm surprised by the recent rally. I do have 100 shares of QQQ with a sold call at 300 that expires on 8/26. Good news is that I am positive on the trade at that 300 call. Bad news is that I missed out on this rally. At the current price or if it continues to climb I will probably let the shares go. If QQQ falters and comes back toward my strike I will probably roll it straight out. Similarly, if I did not own shares, I would look at selling a PUT around that 300 price. Good luck and thanks for watching!
I love this series so much, man. I can't thank you enough Dave, you rule. I so want to start the "wheel" but I've been concerned about selling Puts right now due to.. you nailed it. Not super confident in the market rally at this time. I don't pick highs and lows but what do when your gut says "just buy more JEPI" if anything?.. sell a put instead and collect $30? I've been very happy with HDV and JEPI this past year. Perhaps I start mid-wheel with what I already have like JPM and CVX and start with a Call to start the wheel? Thoughts?
Hey Jeff! Thanks for the support. Appreciate it! You can start with a call for sure. If you like your position in JPM and CVX but are bearish on the market, sell an OTM call to collect some premium. You can also look at selling a put but if you are bearish it makes sense to watch until you like the market or a certain stock looks attractive. JEPI and JEPQ are always available if you are looking for income and want to dollar cost average into them.👍
@@wealthadventures I have an Option (CTRA Sept 9, $30 Put). Sell to Open. It's dropped below that. It's at $29. What are my options for this situation? Anything I can do before Sept 9? I'd like the stock, but cheaper if possible...? Help, thanks! Etrade customer service useless, thanks!!
@@CGroovy1975 Hi Jeff. Since you would like to buy it for less, have you looked at rolling out the option? It looks like you could roll out and down to a 29 Sept 30th exp for a small credit. It would look like this: Buy to close 30 9/9 expiration (Debit ~$115), sell to open 29 9/30 expiration (Credit ~$140) for a net credit around $25. Just 1 example but that would save you $100+$25 per contract since you are rolling it down. You could also go our further for more credit but also more exposure to time.
@@wealthadventures Thank you for the option on my option, sir!! If you had a consulting service, I would sign up. No advice, just training!
Unfortunately it's saying I don't have funds available to cover the new Sell to Open (I closed the other one). "Buy 1 CTRA Sep 09 '22 $30 Put Expired"
Need a day to settle? Thanks again!!
What are your thoughts on using the wheel strategy with MRVL (Marvel) and SE (Sea Tech). They both have really good premiums, but is that enough?
Hi. I like MRVL but still a little expensive for me in this market. I have not looked at SE. Premiums come from volatility but I try to ignore the premium while I shop for a good trade. So if you like MRVL at the current price and you can sell a PUT at a price you like to meet your goal... that may be the trade for you. In other words, the premium comes last in my opinion.
recently my friend had to keep re rolling his put to a future expiration but somehow he was assigned with a week left on expiration. so re rolling doesn't always work.. you will be assigned one way or another..
Hi Joseph. Assignment can occur for various reasons but hopefully by that point you like the strike price.
@@wealthadventures no, my friend didn't like the strike price thats why he kept re rolling.. i still find it odd that only 7 of the 10 contracts were assigned leaving 3 still open.
@@josephsaeteurn9158 Assignment is random. If someone executes a contract the Options Clearing Corp randomly selects and bang... someone gets assigned.
Hey Dave I saw that you sell options on O. I have never sold options before but I am close to 100 shares of O is it at risk of getting called because of the monthly dividend?
Hi Rex. I have owned my shares of O for awhile now. I sell OTM calls for the most part that allow me to collect a small "extra dividend" but still keep my shares. My strike price has not been tested lately for sure!
Hi Dave what is the relative profit difference between selling monthly expiring options versus yearly expiring options as far as premium goes putting assignment risk aside? I know it's different for each stock but what is roughly the average difference. I am trying to figure out whether the hassle of managing monthly positions is worth the extra effort versus a yearly position.
Hello. It does depend on the underlying but ballpark around 2:1 (12 monthly ATM call options should be about double 1 yearly ATM call). On some larger positions I do sell yearly options with a few contracts. You will also close out monthly options after 1,2, or 3 weeks at times and roll for additional income vs a yearly option that I will sometimes close after 6-9 months. Definitely less work! Good luck!
Is IWM too volatile for the wheel strategy??
Hi Brian. My opinion is no. However, I have not used the Russell for much myself so not speaking from experience. Plenty of volume and I don't see a reason to say no.
@@wealthadventures Thanks for the input Dave, luv the channel 👍
@@briangemmet3567 Thanks!
why not sell a put and a call at the same time? the stock can only go one way, up or down
Hi. That is true and you can begin that way if you like. I look for certain conditions when I do sell a put and call. I did a video on strangles not long ago:
ruclips.net/video/wzVozM9qG54/видео.html
It really depends on the market IMO. For example, I'm not interested in selling PUTs right now but calls are starting to look attractive.
@@wealthadventures you should make a video about this new VIX etf called SVOL it pays 18% annualy
@@alejadroigoyanes Will do! It is an interesting idea.
STOR ded.. privately acquired..
Yup... I liked that REIT.
Hi Dave, when do you think would be good time to sell a call on Spy, thanks
Hi. Not sure about your situation but I have sold calls against all my shares at this point. Last week was a great rally but I'm not confident that it will continue. Just my opinion!
@@wealthadventures I agree, I think we trade sideways and choppy until end October.
Stategy
How are you doing on selling lately?
Hey Miguel. Are you just talking about selling options in general?
I have done very well on doing the wheel on PCG check it out.
Hi Robert. Thanks for sharing. I will check it out!
双币理财啊
Spy 20 - 45 days out!
Hey Adam. Selling calls?
@@wealthadventures Been challenging this year. The vix is high so the money has been good, but the highs have been high and lows low so it's really been difficult to make steady money. Lots of calls getting assigned itm.
@@adamnorthville5636 Yes. It was been hard to decide between sticking with a bad trade that is deep ITM and producing little income or letting it go and jumping into a different position. I think it is all coming back to me so still rolling out most of my calls.
What broker do you use? The interface you’re using looks simpler than TD Ameritrades ThinkOrSwim
Hey Andrew. This is from Fidelity. Pretty easy to use but with some drawbacks. A few screens are buried but overall I like it. Also use Etrade which I like. I think if I could pull the best of both you could have 1 great platform.
Thanks for the reply! If you don’t mind me asking, what are some of the drawbacks?
@@AndrewMatias Minor issue but I would like to see option chains at the time of a trade. You need to pull additional screens to find it. Not a big deal and solid overall.