Wheel Options Strategy - What To Do When Your Stocks Are Falling And In Trouble - Trading Like A Pro
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- เผยแพร่เมื่อ 24 มิ.ย. 2021
- Wheel Strategy is great strategy with one major risk. In this video, I'll show you what I do so that you know what to do in case this happens to you. Let's dive in!
To get the transcript and MP3, go to: www.rockwelltrading.com/coffe...
What Is The Wheel Strategy?: 0:32
My Current Positions: 1:20
What's My Plan?: 4:31
Currently, I am already assigned with 2 stocks: RIDE stock and LVS
And I might get assigned on 2 other options positions where I sold puts:
AA at $35 per share (it's down more than 6% today!) and CWH at $37.50 per share (it's down more than 4% today!)
According to my plan for the wheel strategy, I should have no more than 5 open positions.
So what do I do now?
What if I'm getting assigned the 2 stocks tomorrow?
Does this mean I can only trade 1 new option next week?
Recommended Links & Videos:
Wheel Playlist: • Options Income Trading...
How To Fly Rescue Missions: • Wheel Strategy Tips - ...
Wheel Strategy: What To Do When You’re Assigned: • The Wheel Strategy: Wh...
Is Trading Forex Worth It? • Is Trading Forex Worth...
Wheel book: www.rockwelltrading.com/the-w...
PowerX Strategy Book: bit.ly/2wMQ7zW
#StockMarket #TradingOptions #OptionsTrading
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I hope this video helps those of you who find themselves in the same position. Let me know if you have questions down in the comments.
Recommended Links & Videos:
Wheel Playlist: th-cam.com/users/playlist?list...
How To Fly Rescue Missions: www.youtube.com/watch?v=OlTD9...
Wheel Strategy: What To Do When You’re Assigned: www.youtube.com/watch?v=K_zBG...
Is Trading Forex Worth It? th-cam.com/video/HXrP7uHLWLk/w-d-xo.html
Wheel book: www.rockwelltrading.com/wheel...
PowerX Strategy Book: bit.ly/2wMQ7zW
Looks like they both popped over your strike price today so no assignment
always prime content! LOVE how you share all your trading. The good, The bad, The ugly.
Awesome! Thank you for watching! :)
Another great video, Markus! I’ve been trading options since 04/12/21. Im up 26.34% but I got assigned on MARA and MU last cycle. I need to learn exit strategies and assignment management tutorials. This video takes the fear out of being assigned. A big “thank you!”
Awesome! Thank you for watching! :) I am glad that this helps. Watch out for my next video.
Very calm and inspiring.😀
Thank you! :)
Love this..."Since I've owned this stock, I've become an expert on RIDE. Don't want to be an expert on Lordstown Motors, but..." Hang in there, Markus!! You're getting very close and I agree they're set up for a bullish move soon with the changes.
Thank you for your support, Tesla Stretch! :)
Very helpful!
I am glad that this helps. ;)
Hello Markus I just wondered how long your books take to get to the UK please? Love your videos. Thank you.
Hi there, the team says it usually takes 2 weeks. If you already ordered a book, you can contact my team at support@rockwelltrading.com and they can track it for you. 👍
I like that handy Dandy calculator for options.
Right? I couldn't trade without it! Makes my life so much easier 😀
You are getting excited about premiums when the color is orange not green, I thought orange is meant to be cautious because it too high of a percentage. At this indicated rate, wouldn't lean towards a high risk and would be better to accept a premium when the color is green?
When the color is orange, just be aware that there might be something that could move the markets a lot. So we recommend that you double- and triple-check that you don't miss anything. Does this help?
I’m missing something on RIDE. If your break even is 14.39 that includes the $15k in premium to reduce the cost basis. If you get out at 14 plus the CC premium for the week that sounds like about a break even. In this case I would say is not good but good considering everything.
Hi Jeff, yeah.... I just sold some calls with a strike price of 16. This way, I'll definitely keep the premium AND make some money on the stock. Making sense? 👍
5 star review for ur service support
Thanks, Simon! Much appreciated. I'll let the team know 😀
Hi! I wanns trade Binary, but im having trouble finding any good broker platform that i will be able to use for Binary trading in Norway (EU?) Any tips?
I used Nadex. You have to check if it is available in your country if you are outside US. :) Here's more info: rockwelltrading.com/nadex. Let me know if this helps.
hey mate , when you sell puts how do you determine what expiry date to choose from?
I usually just go 1-2 weeks out. I like the idea of "weekly paychecks". Does this help? 😎
@@rockwelltradingservices cheers that helps!
Awesome! Thank you for watching! :)
Hi Markus. Awesome video. Thanks for sharing. Am still new to this but really excited to get my feet wet. Quick question - If the market are going in a way that have increase your options value considerably, rather than waiting the options to expire, can we just close off the options and pocket the profits from the options market itself? If so, will we still be able to keep the premium if in the case of we short of either call or puts?
Yes, you can close an option early. When selling options, I usually close it when I see 90% of my total max profit. Does this help?
@@rockwelltradingservices thanks Marcus. It does. What happens to the premiums we already collected? Do we still keep them?
YES! You always keep the premium that you collected, UNLESS you choose to buy back the option. But if you let it expire, you'll keep the premium, regardless of whether you are assigned or not.
@@rockwelltradingservices i mean are we still be able to keep our premiums, in the situation where I close out ( buy back) my short put position when the option value is 90 percent of my max profit prior to expiry?
Ah... sorry, I misunderstood. Well, in this case, you keep 90% of the max premium. When you are buying back the option, you give back some of the premium you received. Making sense? 👍
Wish I would have found you earlier!
You found me now! :) Watch my other videos too.
If getting assigned is so exciting, why not sell PUTS ATM?
Hey Yo!,
If you embrace the Number One Rule Markus has--that you will Never use the Wheel strategy on any stock except those you wouldn't mind owning or even would like to own, and trade only one-fifth of your tradable funds on the stock you choose, then you will want to sell OTM Puts that would allow you to buy that stock On Sale--less than the current stock price.
His software will always choose an OTM Put with a probability of roughly 75% that the option will expire worthless and you get to keep the premium you were paid for taking a sell-to-open position. There is a roughly 25% Probability that the option will expire ITM, and the CBOE will PUT 100 shares per contract into your account and take from your account the amount equal to your strike price times the number of shares. You also get to keep all the premium you were paid to take on this sell-to-open option. The key here is that holding a STO option to expiration will always result in you keeping the entire premium, and you don't have to pay option fees twice (once to open an option and once to close it).
So, if assigned stock, you then get to make money on the shares PUT to you that you now own. You may own them for as little as one day, one week, or as long as a year-it's up to you. Since it's a stock you like, you won't mind waiting it out while its price rebounds over time back to your original strike price or higher. That fifth of your tradable funds are tied up while you work on lowering your cost basis via selling calls, to hasten the process of breaking even or produce a good-sized gain.
So why not use ATM PUTS? You CAN!!! The tradeoff? For the stocks that increase in price, you get to keep all of the higher premium you were paid to take on the STO option. The probability of that outcome is roughly 50%, though it is also a function of your stock selection strategy--if you pick winners more than 50% of the time, then your options will expire worthless at the higher rate of your stock selection. The Down side is that, for those stocks that decrease in price, these options will expire ITM. You will be charged the higher strike price of an ATM option you sold to open. You will find the time of ownership will also be greater, tying up that block of tradable funds for longer, but the calls you sell while waiting for the rebound will lower your cost basis
Have a great weekend.
Dr K
I couldn't have said it better! 😀👍
That's the only danger, selling puts and the stock market crashes or some really bad news come out and the company stock dips more than 20%. I saw a video here on TH-cam a guy said selling covered calls is very dangerous. All because the stock he sold covered calls on shot up one day. But these are really missed gains, not losses. However we're aiming at building a strategy that is systematic, repeatable and consistent, right? So with this strategy you give up on some potential gains when you sell covered calls, but you also get unrealized losses when the stock price dips below the strike price on cash-secured puts. Meaning you will only lose money if you sell instead of trying to dig yourself out of the hole That's your tradeoff. Now that's why the stock selection has to require a set of criteria, we have to make sure it's not a shitty company. I'd rather go with companies that are profitable or about to become profitable, have low or no debt, and have good earnings. I believe you mention in your book, don't sell options on stocks that are close to report earnings?
Yes, that is the danger. And yes: I do NOT sell options on stocks that report earnings before my put options expire. 👍
@@rockwelltradingservices i like your videos but what if RIDE never comes back and slow bleeding out while you are holding 150K worth of shares (Plus market crash is on the horizon). Possibly adding more as you explained previously.
That is way to risk for a rescue mission!!!!
re: RIDE, with such a large position you could sell 5k worth of 15 calls now and more if it pops up.
My position is around $150,000. So $5,000 wouldn't do anything. 😎
Provided we have enough funds to take the assigned stocks
Awesome! Thank you for watching! :)
Today in 2024 JWN is $17.65. It’s been constantly falling since this video. That’s about a 45% loss.
Help me make money with options like you
Hi! You can check out the playlist for options here th-cam.com/video/EyfuSwO42lI/w-d-xo.html
I hope that helps. :)
@@rockwelltradingservices Yes now I know the basics, is TD Ameritrade a good perform to use to start option trading? I learned I need a margin account plus able to sell options (puts) ?
I personally use tastyworks and Tradier. They are both cheaper than TD Ameritrade, especially when you trade more actively. How exactly can I help? 😀
Dude, can you send me an Instagram, Twitter or Gmail?Business consulting
Hi! You may reach out to any of our social media accounts. For FB - @markusheitkoetter and IG - instagram.com/markusheitkoetter_/.