Trading Strategy With A High Win Rate - Why I LOVE Trading "The Wheel"
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- เผยแพร่เมื่อ 22 ต.ค. 2020
- As traders, you have to accept that you're going to take losses...but it doesn't mean we like it! So you're constantly on a hunt for a way to improve your edge, with a strategy to increase your win rate. This is exactly why I absolutely LOVE trading "The Wheel."
So three months ago, I started with $50,000 in a tastyworks margin account. To this point, I've realized: $11,329 or 22.7% in profits. Not too bad, if do say so myself. Now, IF I can keep this up that would be 22.7%* 4 = 90.8% per year. And I think that's pretty impressive for any trading strategy!
So are these SRC profits? Short answer, YES! So let's take a quick look at the strategy:
"The Wheel" - Overview:
1) Pick a stock that's going sideways or slightly moving up
2) Sell a Put Option, i.e. you have to buy the stock at the strike price
3) Collect premium and buy it back when we see 90% of the profits
4) If we get assigned, i.e. we have to buy the stock, we will sell Calls
- We have to sell the stock at the strike price
5) Collect premium on the call and we buy it back when we see 90% of the profits
So with that overview, we can answer the three key questions a good trading strategy answers:
1) What stocks or options to trade
2) When to enter
3) When to exit
Now let's take a look at some recent trade examples. First, I want to look at a trade-in DOW. At the time of this trade, I've been in for two days. What I'm looking at is that DOW will stay above $45.50 Put for two more days. And looking at the chart you'll see it would have to fall a long way before it gets there. For this trade, I'll collect $44 per Option and I sold 4 of them which would equal: $176. This might not seem like a lot, but it was a high probability and only took a couple of days.
Here's another example of a trade I still have on in KSS, where I sold the $18.50 Put for $15 per Option and I sold 13 of them giving me: $195 in 7 days.
Another trade example is in IBM where I sold 2 of the 115 Puts for $43 per option giving me: $86 in 3 days
Now if IBM were to dip below 115 before expiration, could I get assigned? Of course, but that's part of this strategy. And that has happened a few times already. Let's take a look at those trades in AAPL, TQQQ, and TRGP. With all three of these, I was assigned shares, but as you can see those happened to be the trades where I made the most money. That's why I don't mind when that happens because I'm picking stocks that I wouldn't mind owning in the first place.
So now, let's discuss where things can go wrong with this strategy:
How Can You Mess This Up?
1) Picking The Wrong Stock
2) Picking The Wrong Strike Price
3) Picking The Wrong Expiration
4) Not Getting Enough Premium Per Day (PPD)
5) Not Knowing What To Do When You Get Assigned
I hope this helps! P.S. Right now, I'm running a special on my "Power Income Alerts" where any time I take a "Wheel" trade in my personal account, I'll send you an alert. You can try it out for 30 days for just $1: bit.ly/31zXTJX
The Wheel Strategy Playlist:
• The Options Wheel Stra...
#tradingstrategywithahighwinrate #highwinratetradingstrategy #besthighwinratetradingstrategy
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As you should be aware, there is no "Perfect" trading strategy. Will I eventually have a losing trade? Of course! But, "The Wheel" is an amazing high win rate, trading strategy! Let me know if you're trading "The Wheel" in the comments :)
Do you trade crypto binary options as well..?
Good question. I did a video on this topic. Check it out: th-cam.com/video/amnn-N5AiAI/w-d-xo.html
What do you when the covered calls gets assigned? Just rinse and repeat the process and start selling puts against the stock? (Hence for the name “the wheel” I guess) is that what you do?
i love it when the make sure to let everybody know how small a $50,000.00 is to them.
My winning percentage running the wheel strategy for the past 3 months is 100% too so I believe YOU
Hi Think Money, thanks for watching. And thanks for your feedback. Much appreciated. "See you" in the next video 👍
Cool THANK YOU FOR POSTING this video please don't stop posting because i see you as guide 👍🏻
Hi Christo, thanks for watching. And thanks for your feedback. Much appreciated. "See you" in the next video 👍
"The Wheel", including the name, has been around for a very long time, so please don't lay claim to the strategy or the name. Make sure to tell your subscribers about the significant dangers of weekend margin calls on the Put side. With that said, it's a very sound strategy ,and if you can average 2-3% per week, you can turn a 10k account into a million in 5-6 years. Legitimately! By the way, I'm not a subscriber of yours, nor am I selling anything myself. I use this strategy with about 50% of my account. It's capital intensive, but is very very reliable (and so easy it's kinda boring)! My unsolicited feedback? The Wheel is a winning strategy, and Markus treated it well here.
GREAT COMPILATION VIDEO !
Thanks, apfelsnutz. Good to see you on today's Coffee with Markus!
Wow i love you..
you explain if so perfect
Going to do this with amd tomorrow
Thanks for the feedback. Much appreciated.
Wish I found you sooner on youtube...but better late then not....thank you mark
Any time! Glad we connected now. "See you" in the next video 😀👍
Brilliant! I'm a new options trader. I love this method. You explained it very well and thanks for sharing.
The idea is to constantly collect premiums and who cares what the price is. I'll sell puts or calls. Every once in a while I make a small gain or loss no big deal. I think I'm going to do this with 30% of my portfolio to just generate premium income.
Hi Gold Knox, thanks for watching. And thanks for your feedback. Much appreciated. "See you" in the next video 👍
Very interesting video!
Thanks for sharing.
I have a question: are you selling only “cash secured puts” or are you using margin as well ?
With a strike price of $100, how many contracts can we see with a buying power of $50K? Only 5 ?
.. and we decide a very low delta, i.e., less than a deviation standard ?
Super important to pick the right stock with enough IV and finding balance for enough premium per day , a good strike price and DTE.
Exactly! 😀👍
Really appreciate live examples. Market seems too high right now. Still a very good system in the right market.
😊 You are welcome! I am glad that this helps!
Hello Markus , so you are looking at-least $20/ day per trade. Can you tell me what’s your minimum you go with per options (like $15/contracts or lower?)
Thank you Kindly 😊
😊 You are welcome! I am glad that this helps!
Great video!
QUESTION... do you always go out 4DTE to 7DTE or do you go out farther out?
Thanks
I usually sell puts with 3-10 DTE.
"The Wheel", including the name, has been around for a very long time, so please don't lay claim to the strategy or the name. Make sure to tell your subscribers about the significant dangers of weekend margin calls on the Put side. With that said, it's a very sound strategy ,and if you can average 2-3% per week, you can turn a 10k account into a million in 5-6 years. Legitimately! By the way, I'm not a subscriber of yours, nor am I selling anything myself. I use this strategy with about 50% of my account. It's capital intensive, but is very very reliable (and so easy it's kinda boring)! My unsolicited feedback? The Wheel is a winning strategy, and Markus treated it well here.
Hi Steve, thanks for your comment. And I'm sorry if I'm giving you the impression that I'm trying to claim the name "The Wheel." That's not the case - at all. YES, this is a strategy that has been around forever.
And you are absolutely right about the upward and downward potential of the strategy.
In fact, I did a video today in which I explain why it is important not to over-leverage your account and how to avoid weekend margin calls.
Have you had a chance to look at it?
th-cam.com/video/aUVw9HYrFFE/w-d-xo.html
Talk soon!
Hi sir, I enjoyed your video but I have some queries. Why is $20 PPD the minimum threshold for you ? It seems like an arbitrary number. Secondly, do you pick strike prices based on some probability of OTM or delta ? Because if one merely aims for high premium, one could pick high delta strike price and mess up the strategy. Appreciate your thoughts.
Hi there, the PPD is reverse engineered from my annual goal: I want to make at least 30% annual ROI with this strategy, and for this small account it means $20 per day * 5 positions = $100 per day. And I pick the strike prices based on support levels. Here's more information: th-cam.com/video/ZkEOuWW5GVc/w-d-xo.html Does this help? 👍
Excellent presentations. Question: how do you find the stocks for all your strategies. Which screener do you use and what criteria do you plug in to the screener say to find the stocks for this strategy?
I use the PowerX Optimizer. To learn more about this software you can check this out www.rockwelltrading.com/video-tour/
I do trade in ASX. Do you have that service in Australia stock market?
hi, the account is 50K or the buying power is 50K? I had bad experience with margin account.
Do you send the position size details in your alerts? I am trying to understand if this can be traded on a smaller account as well?
Yes, I'm telling you the buying power that is needed for a particular trade, and based on your account size and the buying power, you can easily determine how many contracts to trade.
I saw a video that you did where you talked about the three indicators you use when trading the wheel (RSI, Stochastic, and MACD) but I can't find it now. Can you tell me which video it was?
Hi Rick. Is this what you are looking for th-cam.com/video/r6R6RwT9Yms/w-d-xo.html
Video is good info. I was doing this strategy but then picked some losers (my mistake) and got assigned and holding the traces still. What advice do you have on the losers? Sell the stock and move on?
That's a great question. The key question for you is: Do you need the money that's tied up in these stocks to trade? And do you believe in these stocks long term, or are they "done", i.e. they will never get up to the level where you got assigned.
Once you answer these questions, you'll know what to do.
Does this help? 😀
Hi Markus. Can't say I understand how that strategy actually works. If it was possible everyone would do it. One question in regards to your " power income alert system" Are these on stocks and options trading platforms only or? Also would try out the service to see if your a good predictor but too expensive.
Hi Droopy, actually: a LOT of people are trading this strategy, especially people with larger accounts. The first part of the strategy is a "trick" that Warren Buffet uses all the time - and he's pretty good, isn't he? 😉
What will you do when the stock price goes down a lot and you will be assigned ? In this case you can't sell call options because either the premium of call option would be very low or you would sell call option below the original stock price. This seems to be a big issue for this strategy. Thanks.
If that is the case I would fly a rescue mission. Here is a video I did on the topic: th-cam.com/video/o70hJ53LzDQ/w-d-xo.html
Marcus, Why don't we just keep selling puts on the DOW? Leave all other strategies aside as this 'seems to be consistent/repeatable?'
What are your thoughts on stocks that sell for under $2 using this wheel strategy? I have been doing this a while and getting great returns. These stocks can’t get much lower and historically had much higher stock prices in last several years and now have great premiums. I try to pick stocks with strong price/book values, strong buy recommendations from analysts, and strong insider buying. Returns are great because not much cash used. If they fall and I’m assigned, I just hold until can get a decent call sold.
That is an awesome recommendation.
@@rockwelltradingservices Do you personally ever run the wheel with cheap stocks under $5 Under $2?
Started trading covered calls and cash secured puts 3 weeks ago.. I'm learning (that's why I'm here) the wheel strategy.. I made a rookie mistake the first week on AT&T call having 200 shares assigned the day before the ex-dividend date... I thought I checked ahead of time, but apparently not... The next day I just sold 2 puts for the same strike price and collected more premium... I learned something new today...I always thought there were 365 days in a year.:)
Thanks for the video and subscribed...
Hi stitchergary, thanks for watching. And thanks for your feedback. Much appreciated. "See you" in the next video 👍
Is the Power income alert service still available?
Hi Jacky. Here is the link to it www.rockwelltrading.com/products/rockwell-power-income-alerts/
Hi Markus, thanks for the video. Is this offer still available? I’d like to try for one month if the offer was still available. I’ve got the book. I got scammed by forex traders. I wish I had seen your videos on exposing scammers earlier. Anyway, please let me know if the offer to get trading alerts for 1 month is still available. I have just discovered your channel few days ago. Thank you!
Hi Nhutien, thanks for your feedback! Please contact my team at support@rockwelltrading.com and ask if the offer is still available. They can help you. 👍
@@rockwelltradingservices thanks Markus! I just contacted them.
Awesome!
Can we copy ur trades on this wheel strategy cause i dont have time to learn all this.
Hi there, sure! Please contact my team at support@rockwelltrading.com and they can set you up. I'll then send you a text, email and push notification whenever I enter a new trade. Is this what you're looking for?
You really should learn all about trading. Otherwise, why are you here?
Markus, awesome video and waiting for ur book. Never did the PUT side but I’m leaving $$ on the table. So, do we “sell to open”a PUT similar to “sell to open a call? Also, the best time to sell a PUT is just before expiration (week) Thanks in advance.
Hi Don Rahmer, thanks for watching. And thanks for your feedback. Much appreciated. "See you" in the next video 👍
Only problem is having a broker that allows you to sell puts
Hi Mario, that's not a problem at all. I made a video in which I reviewed 5 different brokers, and here are the results:
th-cam.com/video/4MoU-UiDAi4/w-d-xo.html
Does this help?
Any cyber monday discount?
I'm sure we can make something happen. Please contact my team at support@rockwelltrading.com. I'll let them know that you'll be sending an email.
DOW is a chemical company, not the Dow Jones Industrial Average
It's very worrying that you traded DOW chemical thinking it was the DJIA
If I start with 5k, I.can pay only your subscription charge of 147 per month
Hi Jithesh, if you have less than $10,000 in an account, I highly recommend that you start with the PowerX Strategy to turn your account into a larger one. "The Wheel" strategy is better suited for slightly larger accounts.
Appreciate your insight Markus. My University student budget is definitely slim
Why buy back at 90% profit vs wait for 100%?
Yes. Same question.
Hi Robert, think about it this way:
Let's say you're selling a put that expires in 5 days for $100.
So on average, you're making $20 per day.
But after 3 days, you could buy it back for $10.
So you make $90 in 3 days.
If you hold it another 2 days, you could make an additional $10, i.e. $5 per day.
For me, that's not worth it. I'd rather look for another opportunity.
Making sense?
@@rockwelltradingservices Thank you for the clarification. Could you also clarify when it is best to buy 100 shares of a stock vs sell a ITM Put?
Hi Robert, when selling Puts you're collecting premium AND you can buy the stock at a discount. That's why I prefer trading "The Wheel" instead of just buying shares. It's basically double-dipping 😀
GREAT COMPILATION VIDEO !
Wish I found you sooner on youtube...but better late then not....thank you mark
You are welcome! Thank you for watching! :)
Great video!
QUESTION... do you always go out 4DTE to 7DTE or do you go out farther out?
Thanks
Hi Gina, I usually don't go further out. I like the flexibility of 4 - 7 DTEs.