Spreadsheet: docs.google.com/spreadsheets/d/1RXNUa8-n6r06CdTCt5PxWqoMp6q1ZSZJGEicoP-pGeA/copy#gid=648757628 Like it? Support the channel by grabbing some free stocks in the description!
Why don't you film a complete real turn of the wheel and don't try to add commentary. Just do the trades and record it all the way through the turn of the wheel's 6 steps. Then edit it all together and add commentary afterwards to explain each trade and activity you are doing at each step. Real world trades and actual screen shots to confirm the method with an explanation after the fact for you, but as we go for us.
Dude. You were the first channel and Options video I ever watched 6 months ago. Now months later, and thousands of dollars in gains, I owe you a huge thank you. Thank you for your amazingly informative vids, and awesome content. By far one of the most informative channels out here. Keep em coming, bro!
@@DerWonMusics Dude. I KNOW EXACTLY WHAT YOU MEAN. Believe it or not, it gets better over time. One year ago, I broke out an empty journal and just made a glossary of all of these words that everyone was using. Then, I put Adam's ITM videos on repeat. Slowly, but surely, i learned to speak the language and get a handle on the tools. You will too. Just hang in there, man. Keep it simple, and then slowly level up over time. You got this, Bro.
@@DerWonMusics if you are still confused go back to the basics. Im still green around the ears with options. Im working on my long term portfolio while studying options. Greeks are crucial but like our boy here says. Once it clicks it clicks. Implied volatility is very important. Learn the greeks. That shit helped me understand the language immensely
5 years ago I trained a new employee and he told me about trading options. It took me 5 years of research and reading books on options to become confident enough to pull the trigger on options trading. I’m truck driver who trades stock options now. Your videos were a huge help.
Exactly. I think of it like drawing my line in the sand, and I can set that line wherever I want. I think what people are struggling with this the concept of "it depends on the stock". Like... you still have to read charts, time your sales to maximize premiums, have a thesis on the direction or timeframes, and be familiar with the price levels. For me, I just use CSP as entries. I wait for a dip, find a cost basis that I can live with, and try to sell an ITM Put for larger premiums on the dip to get myself assigned on something that I want to own anyways. And if I'm on a hyped up growth stock, I'll sell my CCs as high up OTM as I can just to snag passive income and avoid assignment. When I'm done, or if I think the stock will hit its limits by a certain date or catalyst, I'll sell a final CC ATM for larger premium to try and induce a sale.
@@nevermore311 I like your choices on where and why you place your strike prices based on technicals and confidence of where the stock will go.. I have been using the Wheel Strategy almost exclusively for 6 months now and I've NEVER made more consistent and repeatable income and gains with any other strategy I've tried in the past. Yeah, I still trade a few poor man's covered calls to spice things up a little bit, but The Wheel is my bread and butter. Thanks for sharing. Knowledge is power, IF you apply that knowledge.
@@nevermore311 Are you going to end up with a cost basis of zero on 400 shares, because you bought 500 shares so cheap in 2020 that selling 100 shares at the current price will cover the cost of the remaining 400 shares? Or is there some other reason your cost basis on 400 shares will be zero? Covered calls on the current stock price will cover the cost of the stock purchased back in 2020?
Huge move in the market today, I NEEDED to come back to this video for reference about rolling my covered calls up and out. Thanks for taking the time to explain and ease my nerves. SPR! Huge move today, cost basis at 16 after 4 months of selling my puts and covered calls. Popped to 27 today, now I am rolling up and out to DEC @ 22.5 for more credits. Thanks again!
Great video. One draw back of the wheel is that if you do get assigned and the stock goes much higher in value than your covered call strike and you allow assignment, you lose out on some gains. One thing I have done is to sell two CSPs. If I get assigned, I sell one covered call and if the stock takes off higher, I can sell the other 100 shares and take advantage of the move up. This is very dependent on account size as it requires selling two CSPs.
The way to make this tutorial stick for most people would be to record yourself actually going thorugh the steps over about 2 months. Record yourself setting it up, then again a few days in for an update, again if /when you roll your put out, and again when you are either assigned or when contract expires
You have changed my life for the better. Because of all of your tutorials and lots of nights studying. I have managed to change my whole world around and have no plans to go back. Thank you very much
Great explanation. If stock price comes way down and your put gets assigned but you can't sell a covered call above the cost basis, go with a safe otm strike with 0.3 delta or lower even if strike is lower than cost basis, taking premium lowers the cost basis more and roll up and out if it gets at all close to the cc strike lowering cost basis again til the cost basis gets low enough that you're ahead when your shares finally do get called away. Great explanation on that. If your put gets assigned but you think the stock is going to keep falling, then the covered calls you're selling will decay fast and you can just keep selling them to mitigate losses.
Yes I like weekly, if I get assigned ill do what u teach cc.. the most ill do is 2 weeks.. I can't imagine money tied up for months. I love buying to close when im up over 70% profit..then roll it to double dip
7:15 This is exactly what I do. I'll just write an at the money CSP to lower my cost basis on something that I was just going to buy anyways. If it goes up past the strike then I likely made more from premium than I would have outright owning 100 + if it goes lower then it's better to have written the option because I did not lose as much as I would have otherwise. If it's something I don't really want to sell then I'll write obnoxiously OTM covered calls if the reward is decent enough to be worth it. If it's something I'm using for wheel premium then I'll write 1-2 week covered calls just barely OTM.
I don't see the point in not writing CCs at all times on underlyings that you own... I own TSLA at 340 and have been writing 520 CCs for forever and have made approximately 50.00/ share so far... which I use that premium to fund dividend stocks in my IRAs, in my margin I use it to speculate
What I do.. all stocks I own, I aim to have at least 100 shares to sell call options. If it’s a long term hold and not to volatile, I aim for $5-$10 OTM. Then i have other money used just for mainly the premium that funds my long term holds. It’s a good way to make extra cash
@@jeffshackleford3152 I agree... especially since I think having a position gives one a better insight on price movement.. where as "typical" options traders may only be trying to hit and run without as much familiarity with the underlying...
@@jeffshackleford3152 Eventually you will hit a point where you just can't sell a CC for a net credit when you roll it out and you will have to take a small hit to hold onto your shares or roll it to the point where you can stomach the hit to buy to close the sold covered call position. Granted it's a very small chance, but it is a downside to keep in mind
@@LBJurgens IDK about Robinhood or his account there but, at a full service broker you can have 'limited options' enabled on an IRA and official regulations then require it to be classified as a PDT account no matter what the size.
One tip I would add, especially if you are bearish, but even if your not, waiting for a pullback will increase the premiums on puts. Therefore you could sell a further out the money put, essentially lowering your collateral and cost basis by selling at a lower strike for close to the same premium then if you just sold the put right away. Then once it rebounds buy to close, rinse and repeat. Unless of course it’s bumble 😂
Thank you for explaining everything here! It's really helpful and I feel confident now doing cash secured puts, you laid it out well in the previous video.
One concern I have with the wheel strategy, as explained, is that when doing a covered call, your adjusted cost basis could be lower than the current stock price. If you get assigned within 30 days, you would be selling at an actual loss (although the strategy is at a profit), but it would be considered a wash sale for tax purposes.
Hi Adam, I've been watching your videos for the better part of a year now and I'm slowly dipping my feet into the waters of investing and trading. Your content is super high quality and its always worth the view. Keep it up!
Rolling was the part that had me a bit tripped up. THANK YOU for doing it. Now I'm not intimidated by any of it. This is why I sub'd, your content is fantastic.
Thanks for the info. Only thing I'd add is early assignment on Calls. Other than a random fluke assignment, early assignment will almost always occur immediately before a div ex date if the extrinsic value is less than the upcoming dividend. If you want to keep the dividend, I'd advise rolling the day before the ex date.
Been starting the wheel with T. Got assigned at 27.50, with cc delta 30. I think I can earn around 6% a year in premiums plus 7% in dividends. Premiums will go to dividend growth companies holding for long term.
Hi!! I love your channel, I have a question on Chevron (CVX) I sold a covered call below my cost basis by a lot and its expiring this Friday, (I was bag holding it for a while and trying to get some premium). Sold $74.50 covered call for premium and didn't expect it would jump to $82!! My cost basis is $82!!! What do you recommend I do? Roll it over? It looks like I need to roll it for at least 3 months to break even. Should I just let it go at a loss? What is your recommendation?
This is an incredible video, Adam. I sense that you were a bit nervous when making this video but you have nothing to worry about! Your work here is excellent and I really am challenged to watch this again more than once and absorb it all. Thanks for everything!
Thank you ...u almost uttered the name of the etf that u mentioned at start .... were u thinking of the usually big ones like qqq,spy,dia, ect or had u a less pricey one in mind. Appreciate.
Dude! I am loving your videos! I’ve watched a ton of other videos about options and strategies and it never clicked until I found your videos! I’d love a video about your strategies in reading charts.
Question: If the other party, the buyer, sells his premium back early before it expires and the option is still out of the money but not worthless, do I still get assigned or is the difference in how much I collected in premium vs the value when they sold taken from me? Also how many premiums can I sell per 100 shares as collateral? Like can I sell 5 or 10 contracts if I only have enough collateral for 100 shares?
Can you explain getting assigned after selling a covered call off a leap? You wouldn't have to buy the stock...you would get paid for the leap shares you control right?
From what I've found with the wheel strategy and how far out you should be choosing an expiration date is that the closer the date the more you will be earning per day. As an example, a put from XYZ with a delta of .3 that expires in 7 days will net an ROI of 2% while another put from XYZ with a delta of .3 that expires in 14 days will net an ROI of 3%. So by extending your option's expiration date out further, you will earn more from the trade, however, you are earning less over the period of time.
On step 5 you can also sell another cash secured put to reduce your average instead of selling a call or sell both. This is why i love selling options.. So many options.
I think you’re doing a splendid job. I’m definitely learning tons. Thanks so much for taking the time! One minor suggestion: I did camera work for a professional channel for over a decade.... If you were to drop the microphone stand so it comes into the screen from the bottom left of the frame rather than the top left, it looks more crisp and we can also see the screen. Wishing you well! Cheers.
Yes, a lot of people will look at the premium of a weekly and then look at the premium of a monthly and think to themselves that the monthly earns them more premium. PPD, the average price per day will show, that's not true. If you sell a weekly put on Monday that expires on Friday, you got 5 days until expiration. If you divide the premium received by 5, you get the daily average, PPD. Now do the same thing with a further out expiration with the same strike. Divide the premium received by whatever the days until expiration is, to figure out what the average PPD is. it will blow you away to see that the cheapest options are actually the longer term options, PPD confirms it. Take a 90 day option and divide the premium by 90, see how it compares to a weekly PPD. Mind blown. Sellers of option premium should always sell the nearest term expiration and then sell them over and over. You will earn way more premium than just selling a monthly option, or a 3 month option, ETC.
You monthlies are for people who aren’t on top of their portfolio, it’s also easier to maintain a 50-75% BTC on a monthly due to theta decay. Everyone has a risk limit and weeklies are a riskier play due to the proximity to expiration means your put is affected much quicker from volatility in stock price
@@jobobcowman5155 I'm pretty new; but it seems to me that you would only be affected by the volatility on the buyers end. I mean if you're selling ann option and the stock price suddenly shoots up or down 2% it not gonna matter if the option expires in a week or month from now right?
Very nice again. thanks for the clear and detailed discussion. Been using CC and doing well. looking at using CSP to get back in, but want to move a little quicker than waiting to get called out.
Once you've been assigned and you have cash on the sidelines, and still bullish on the stock, could you sell a Covered Call out of the money, and sell another CSP to collect premium on both?
Hey! What trading platform do you find to be the best? Which ones have pre market and after market hours? I’m new to this and I’ve learned a lot from your content. Thanks for doing what you do!
After watching both of your excellent videos on running the wheel, and the one on LEAPS options.. in your experience what generates the BIGGEST gains? I understand they are two completely separate strats, but is there a benefit to doing one over the other? I’m thinking about doing both simultaneously so I have both income generation tool and a long term wealth building tool. The income generation tool can also pay capital gains taxes on my LEAPS options that I either exercise or sell the contract before expiration
I have a $50,000 LEAP $500 premium and selling Covered Calls on it. Strike is $950. Stock was at $850 when I bought it. It’s a 2 year LEAP. Question is usually my risk tolerance when selling covered calls is to set the strike higher than my average cost per share. In this case my first covered cal I set exactly at my break even if $950 and collected $2,000 premium. Now for my second CC being the stock has dropped to $775 I can get a $4,000 premium if I set a $910 strike but that’s lower than my break even. My question is how likely is it that I’ll be assigned at $910 strike when the buyers break even is $950? Reason I ask is I’m confident it won’t get to $950 but maybe it will get to $920 would they exercise if they haven’t hit break even and if I’m assigned I’d take a loss since strike $910 and my break even $950 although I guess I can deduct the $6,000 in premiums and I’m still ITM but still I’d rather not get assigned. Thoughts? I’m new at this
Hey man, been watching a lot lately. Do options trades require clearing house "clearing" - reason I'm asking is my Fidelity doesnt have me down as a "Day Trader" therefor, I have to wait for the clearinghouse to give me my funds after I sell before I buy again... like 3 days ish. I have 2 "pattern day trader" strikes, and 1 more wont be good for me LOL
@InTheMoney I recall you saying that when you STO a cash secured put on a margin account, no margin interest is charged but the margin is reduced by the collateral necessary for the trade. I am wondering if this is correct and assume that margin interest will be charged if I get assigned and do not reduce the margin I am using?
Only question is... if the covered call is going against you. Do you wait to close your CC to sell a new one when the stock price hits your strike price or when the credit you collected evaporates? For example, you have a CC sold on WMT strike is 100... underlying is 95... You collected 100 bucks of premium... stock moves to 100 in a week... 20 days to go... you expect the stock to continue going up... do you get out when the underlying hits the strike regardless of where the premium is or... do you bail out when you are under the water on the credit?
Thanks for the info, Adam. Really great and simple to understand videos! After I got hurt by GME, I've been hammering OCGN and AMC CSP's and been doing quite well...
Thanks for all the discussion on the 30-45 vs different dates. That was the part in your wheel video from October that I wasn't quite jiving with but the way you explained it here helped match with why I was feeling hesitation to start at that far out.
Options still hurt my brain, I still don't fully grasp all the concepts. Though thank you for your video, it's helping me figure this shit out. I'm about to check out what other videos you have.
Really good video. I have watched this one a few times as I am new to options. I will most likely watch it a few more times. Thank you for the great content.
Thanks for the informative videos. I love your content I have been doing the wheel and collecting premiums for 2 months now. I want to sell CSP on SPY as they have more frequent expiration dates and higher premiums but would have to sell most of my stocks to afford it. Do you think it would worth doing the wheel using margin or is there a risk involved I am not taking into account?
Awesome content! I love rolling your contracts weekly. I I have to ask: 1. Can you give some details on your keyboard? It looks amazing. 2. Is this your preferred strategy? 3. Do you use discord or another community platform for investment strategies?
Love your channel. Isn't it true that calculating the break even of the wheel strategy is more complicated than adding up credits/debits and shares of underlyings bought? If you roll when your option is below breakeven, don't you actualize a loss that also needs to be considered?
How do you feel about selling puts on etfs like HYG or JNK? Corporate bonds are kind of range bound and tend to return to where their yeield is aro7nd 5/6 percent. Seems like you can get good vol, good dividends if assigned, and mean reversion. Thoughts?
@Inthemoney How did you learn to trade? You have such in-depth knowledge and are great at explaining. Do you have a video with the best resources you used to learn? I am 38 and only getting into stocks now. I have a lot of catching up to do if I want to succeed.
So if I is my margin to sell puts that are OTM by a decent amount for extra cash, that something you’d recommend? Another 45 extra contracts on certain stocks could be a good amount more and easily pay off the interest that the margin you’d have to pay
Hands down the best channel on Options trading. Clear, concise and not condescending. Do you recommend using the wheel strategy as supplemental to collecting dividends or as a substitute? I have ABBV, MO for dividend income and been selling covered calls to boost income. So far so good.
Been doing this wheel strategy for a few weeks and lost 400$ last week.. mainly due to playing the wheel with Hertz. But during the weekend RH notified me saying I lost 400$ turns out. The stock went from 1.68 to .70. And got delisted. Oh well.. no more penny stock plays for me lol. It's nothing but tissue paper
@Julius Chinn Chicken yea I haven’t tried the wheel strategy yet but when I do I know I’m gonna choose a reliable stock, if you choose a good steady growth stock it seems hard to lose
Lol. Guys com on! Your taking my $400 loss as a end all situation. I love to experiment. Especially with a good chunk of money. Hertz was one of those stocks I fought myself on and decided to just play it until I cant .. turned to be quite literal. Luckily the losses are write offs lol. Ok back to the RH game. 20% roi in a week works good for me.
Since I've started doing this RH thing I've been able to watch the market makers manipulate everything drastically . I was about to put on a deb spread for a year out deep ITM and right before I watched the price of SPY, and a few more drop. SPY went from 330 to like 115 and I watched Amazon go from I think 1200 to about 300. Prices are like testicles. They bounce uncomfortably on occasion.
I'm new to trading... even when I start an order particularly on margin my heart starts pounding (I hate leverage trading with a passion because of this), so thanks for doing it... I'd be shaking the entire time thinking okay... need to close out of this at least break even...... I kept looking the phone thinking that... don't get stuck in this. $13K is a big position to jump into. Particularly if its using margin with leverage. And if you didn't even do a TA and decide it would be a high probability trade. I guess the good news... wally world is a really a decent company, you can't go too wrong... it's that margin/leverage that's the concern.
Your cost basis spreadsheet only works with one option. If you buy multiple of the same option it seems to break? Or am I doing something wrong? I bought 6 options on a stock and it has my " sell above" at 84.xx$
Hi Adam, Love your explanations of everything options. One thing I notice, is you mention rolling your option out 2 weeks a month or even more. I notice on my E*TRADE account that different stocks have different expiration dates. Most of stocks will have monthly expiration dates. Is this and E*TRADE or level 2 issue with E*TRADE. I know you work off of Robinhood, but does it let you pick any stock and let you roll them every week or are you limited on expiration date by the stock you pick?
Question. If I like a certain stock and do not mind owning it, BUT cannot afford paying for 100 shares of said stock. Would it be better to just do a PMCC and repeat every time it gets called away ( or roll out the CC to a later date. )
Spreadsheet: docs.google.com/spreadsheets/d/1RXNUa8-n6r06CdTCt5PxWqoMp6q1ZSZJGEicoP-pGeA/copy#gid=648757628
Like it? Support the channel by grabbing some free stocks in the description!
You need merch inthemoneyadam
@InTheMoney bro can you unban me on discord, please
A cool disclaimer or notice would be if your topic for the post is small account friendly, unless you can do this strategy for sub 10k?
Why don't you film a complete real turn of the wheel and don't try to add commentary. Just do the trades and record it all the way through the turn of the wheel's 6 steps. Then edit it all together and add commentary afterwards to explain each trade and activity you are doing at each step. Real world trades and actual screen shots to confirm the method with an explanation after the fact for you, but as we go for us.
This shit ain't easy, but thanks for trying to explain it to us.
Dude. You were the first channel and Options video I ever watched 6 months ago. Now months later, and thousands of dollars in gains, I owe you a huge thank you. Thank you for your amazingly informative vids, and awesome content. By far one of the most informative channels out here. Keep em coming, bro!
Still feel consfued af.
@@DerWonMusics Dude. I KNOW EXACTLY WHAT YOU MEAN. Believe it or not, it gets better over time. One year ago, I broke out an empty journal and just made a glossary of all of these words that everyone was using. Then, I put Adam's ITM videos on repeat. Slowly, but surely, i learned to speak the language and get a handle on the tools. You will too. Just hang in there, man. Keep it simple, and then slowly level up over time. You got this, Bro.
@@DerWonMusics Still?
@@damonrucker6089 I did the same thing
@@DerWonMusics if you are still confused go back to the basics. Im still green around the ears with options. Im working on my long term portfolio while studying options. Greeks are crucial but like our boy here says. Once it clicks it clicks. Implied volatility is very important. Learn the greeks. That shit helped me understand the language immensely
5 years ago I trained a new employee and he told me about trading options. It took me 5 years of research and reading books on options to become confident enough to pull the trigger on options trading. I’m truck driver who trades stock options now. Your videos were a huge help.
CSP is like a limit order that pays a premium.
and lowers your cost basis.. ;)
Exactly. I think of it like drawing my line in the sand, and I can set that line wherever I want. I think what people are struggling with this the concept of "it depends on the stock". Like... you still have to read charts, time your sales to maximize premiums, have a thesis on the direction or timeframes, and be familiar with the price levels. For me, I just use CSP as entries. I wait for a dip, find a cost basis that I can live with, and try to sell an ITM Put for larger premiums on the dip to get myself assigned on something that I want to own anyways. And if I'm on a hyped up growth stock, I'll sell my CCs as high up OTM as I can just to snag passive income and avoid assignment. When I'm done, or if I think the stock will hit its limits by a certain date or catalyst, I'll sell a final CC ATM for larger premium to try and induce a sale.
@@nevermore311 I like your choices on where and why you place your strike prices based on technicals and confidence of where
the stock will go.. I have been using the Wheel Strategy almost exclusively for 6 months now and I've NEVER made more consistent and repeatable income and gains with any other strategy I've tried in the past. Yeah, I still trade a few poor man's covered calls to spice things up a little bit, but The Wheel is my bread and butter. Thanks for sharing.
Knowledge is power, IF you apply that knowledge.
@@thomasd5488 I own 500 shares of MARA right now, and my goal In maybe 2-4 weeks give or take... I could end up with 400 shares at a cost basis of $0.
@@nevermore311 Are you going to end up with a cost basis of zero on 400 shares, because you bought 500 shares so cheap in 2020 that selling 100 shares at the current price will cover the cost of the remaining 400 shares? Or is there some other reason your cost basis on 400 shares will be zero? Covered calls on the current stock price will cover the cost of the stock purchased back in 2020?
Some of the best explanations of options strategies on TH-cam are on this channel. Would love to see more of these examples done in TOS.
Your extremely responsible with your videos and knowledge young man I image you will have a happy and full life🥳 keep up the exceptional work.
+ 4 4 7 4 5 1 2 3 8 6 0 2
Text on__ what's@pp
Huge move in the market today, I NEEDED to come back to this video for reference about rolling my covered calls up and out. Thanks for taking the time to explain and ease my nerves. SPR! Huge move today, cost basis at 16 after 4 months of selling my puts and covered calls. Popped to 27 today, now I am rolling up and out to DEC @ 22.5 for more credits. Thanks again!
man is so considerate, he said sorry to his mic and/or us when he hit his mic. What a nice guy
It’s pretty tough following the wheel while drooling over that mechanical keyboard. Good looks man
Don't forget - Your Burrito is in the Fridge!
This guy has the r/wallstreetbets haircut 😁
😂😂😂
Without the terrible advice
Been doing this with $MARK. My adjusted cost basis is now $0.00. :-)
Cost basis will go to negative values, and still be careful. In a large swing you can still lose money.
@@MrChonkers that doesn't make sense. If my cost basis is less than or equal to 0.00 I won't lose anything.
505% gain on one of your stratagies! thank you sooo much.
Great video. One draw back of the wheel is that if you do get assigned and the stock goes much higher in value than your covered call strike and you allow assignment, you lose out on some gains. One thing I have done is to sell two CSPs. If I get assigned, I sell one covered call and if the stock takes off higher, I can sell the other 100 shares and take advantage of the move up. This is very dependent on account size as it requires selling two CSPs.
or just rollout for credit or until the stock pulls back
The way to make this tutorial stick for most people would be to record yourself actually going thorugh the steps over about 2 months. Record yourself setting it up, then again a few days in for an update, again if /when you roll your put out, and again when you are either assigned or when contract expires
You read my mind, was just thinking about this this morning. Definitely going to do it.
I agree with this in addition
You have changed my life for the better. Because of all of your tutorials and lots of nights studying. I have managed to change my whole world around and have no plans to go back. Thank you very much
Glad to hear it man 🍻
What did you study man?
Great explanation. If stock price comes way down and your put gets assigned but you can't sell a covered call above the cost basis, go with a safe otm strike with 0.3 delta or lower even if strike is lower than cost basis, taking premium lowers the cost basis more and roll up and out if it gets at all close to the cc strike lowering cost basis again til the cost basis gets low enough that you're ahead when your shares finally do get called away. Great explanation on that. If your put gets assigned but you think the stock is going to keep falling, then the covered calls you're selling will decay fast and you can just keep selling them to mitigate losses.
This gets easier to understand on second viewing. Really good video. I wish more TH-camrs talked about the risks in their strategies like this.
Yes I like weekly, if I get assigned ill do what u teach cc.. the most ill do is 2 weeks.. I can't imagine money tied up for months. I love buying to close when im up over 70% profit..then roll it to double dip
Thats an awesome idea!
7:15 This is exactly what I do. I'll just write an at the money CSP to lower my cost basis on something that I was just going to buy anyways. If it goes up past the strike then I likely made more from premium than I would have outright owning 100 + if it goes lower then it's better to have written the option because I did not lose as much as I would have otherwise.
If it's something I don't really want to sell then I'll write obnoxiously OTM covered calls if the reward is decent enough to be worth it.
If it's something I'm using for wheel premium then I'll write 1-2 week covered calls just barely OTM.
I don't see the point in not writing CCs at all times on underlyings that you own... I own TSLA at 340 and have been writing 520 CCs for forever and have made approximately 50.00/ share so far... which I use that premium to fund dividend stocks in my IRAs, in my margin I use it to speculate
What I do.. all stocks I own, I aim to have at least 100 shares to sell call options. If it’s a long term hold and not to volatile, I aim for $5-$10 OTM. Then i have other money used just for mainly the premium that funds my long term holds. It’s a good way to make extra cash
@@jeffshackleford3152 I agree... especially since I think having a position gives one a better insight on price movement.. where as "typical" options traders may only be trying to hit and run without as much familiarity with the underlying...
@@jeffshackleford3152 Eventually you will hit a point where you just can't sell a CC for a net credit when you roll it out and you will have to take a small hit to hold onto your shares or roll it to the point where you can stomach the hit to buy to close the sold covered call position. Granted it's a very small chance, but it is a downside to keep in mind
@@jerseyse410 I understand.
How come whenever I get a PDT warning, I don’t get a burrito in the fridge? Is that a Robinhood thing?
That pattern day trader notice was hilarious
Seems like Robinhood is in love with the PDT shit - not sure why he has the enable on a 25K + account?!
@@LBJurgens IDK about Robinhood or his account there but, at a full service broker you can have 'limited options' enabled on an IRA and official regulations then require it to be classified as a PDT account no matter what the size.
This is one of the best wheel explanations I’ve watched. Please keep the content coming!
Dude your videos are FANTASTIC!You have a bright future!! Love your way of explaining things and anticipating questions!
One tip I would add, especially if you are bearish, but even if your not, waiting for a pullback will increase the premiums on puts. Therefore you could sell a further out the money put, essentially lowering your collateral and cost basis by selling at a lower strike for close to the same premium then if you just sold the put right away. Then once it rebounds buy to close, rinse and repeat.
Unless of course it’s bumble 😂
I sell weekly and would roll to the following week if necessary but I am still pretty new to this.
Thank you for explaining everything here! It's really helpful and I feel confident now doing cash secured puts, you laid it out well in the previous video.
SNDL 0.14 to 0.54 volume was insane on Friday to the 🚀🌕
7:50 - *takes deep breath* “so first step is to sell cash secures puts”
Me - “we’re still on step 1?!?”
One concern I have with the wheel strategy, as explained, is that when doing a covered call, your adjusted cost basis could be lower than the current stock price. If you get assigned within 30 days, you would be selling at an actual loss (although the strategy is at a profit), but it would be considered a wash sale for tax purposes.
Just found your channel, I'm turning my first Wheel, but I love your explanation. Great job and thanks!
Hi Adam, I've been watching your videos for the better part of a year now and I'm slowly dipping my feet into the waters of investing and trading. Your content is super high quality and its always worth the view. Keep it up!
Rolling was the part that had me a bit tripped up. THANK YOU for doing it. Now I'm not intimidated by any of it. This is why I sub'd, your content is fantastic.
This was an excellent recap on your previous Wheel strat video. Thank you. It's helped me understand a lot.
Thanks for the info. Only thing I'd add is early assignment on Calls. Other than a random fluke assignment, early assignment will almost always occur immediately before a div ex date if the extrinsic value is less than the upcoming dividend. If you want to keep the dividend, I'd advise rolling the day before the ex date.
Facts, thank you.
Been starting the wheel with T. Got assigned at 27.50, with cc delta 30. I think I can earn around 6% a year in premiums plus 7% in dividends. Premiums will go to dividend growth companies holding for long term.
16:55 he's thinking about that burrito
Hi!! I love your channel, I have a question on Chevron (CVX) I sold a covered call below my cost basis by a lot and its expiring this Friday, (I was bag holding it for a while and trying to get some premium). Sold $74.50 covered call for premium and didn't expect it would jump to $82!! My cost basis is $82!!! What do you recommend I do? Roll it over? It looks like I need to roll it for at least 3 months to break even. Should I just let it go at a loss? What is your recommendation?
This is an incredible video, Adam. I sense that you were a bit nervous when making this video but you have nothing to worry about! Your work here is excellent and I really am challenged to watch this again more than once and absorb it all. Thanks for everything!
i finally got it, then u say my brains melting, love u dude, u gonna be rich one day knock on wood!
🌴
These videos are my favorite and definitely the most helpful I've found on youtube. Keep it up dude
Thank you ...u almost uttered the name of the etf that u mentioned at start .... were u thinking of the usually big ones like qqq,spy,dia, ect or had u a less pricey one in mind. Appreciate.
Love your channel!! I look forward to content teaching. Your definitely one of the best on you tube in my humble opinion. :)
Dude! I am loving your videos! I’ve watched a ton of other videos about options and strategies and it never clicked until I found your videos! I’d love a video about your strategies in reading charts.
Question: If the other party, the buyer, sells his premium back early before it expires and the option is still out of the money but not worthless, do I still get assigned or is the difference in how much I collected in premium vs the value when they sold taken from me?
Also how many premiums can I sell per 100 shares as collateral? Like can I sell 5 or 10 contracts if I only have enough collateral for 100 shares?
Thank you for your videos. It's kind of all coming together watching them over and over.
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I enjoy the non polished videos, because it shows the more realistic side of trading.
This is an excellent walk through of your thought process, very helpful thank you.
Can you explain getting assigned after selling a covered call off a leap? You wouldn't have to buy the stock...you would get paid for the leap shares you control right?
You are really great in explaining things! Thank you for sharing your knowledge 🙏🏼
Great job, thanks! Also nice job of describing price discovery.
From what I've found with the wheel strategy and how far out you should be choosing an expiration date is that the closer the date the more you will be earning per day. As an example, a put from XYZ with a delta of .3 that expires in 7 days will net an ROI of 2% while another put from XYZ with a delta of .3 that expires in 14 days will net an ROI of 3%. So by extending your option's expiration date out further, you will earn more from the trade, however, you are earning less over the period of time.
On step 5 you can also sell another cash secured put to reduce your average instead of selling a call or sell both. This is why i love selling options.. So many options.
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I think you’re doing a splendid job. I’m definitely learning tons. Thanks so much for taking the time! One minor suggestion: I did camera work for a professional channel for over a decade.... If you were to drop the microphone stand so it comes into the screen from the bottom left of the frame rather than the top left, it looks more crisp and we can also see the screen. Wishing you well! Cheers.
Good idea, thanks! I’ll adjust that for the next one. And thank you for the kind words.
Higher premium in a weekly CSP.
If its hit at the strike, roll it out another week.
Yes, a lot of people will look at the premium of a weekly and then look at the premium of a monthly and think to themselves that the monthly earns them more premium. PPD, the average price per day will show, that's not true. If you sell a weekly put on Monday that expires on Friday, you got 5 days until expiration. If you divide the premium received by 5, you get the daily average, PPD. Now do the same thing with a further out expiration with the same strike. Divide the premium received by whatever the days until expiration is, to figure out what the average PPD is. it will blow you away to see that the cheapest options are actually the longer term options, PPD confirms it. Take a 90 day option and divide the premium by 90, see how it compares to a weekly PPD. Mind blown.
Sellers of option premium should always sell the nearest term expiration and then sell them over and over. You will earn way more premium than just selling a monthly option, or a 3 month option, ETC.
@@tomd.7929 I just started looking that up. And I am intact shocked.
You monthlies are for people who aren’t on top of their portfolio, it’s also easier to maintain a 50-75% BTC on a monthly due to theta decay. Everyone has a risk limit and weeklies are a riskier play due to the proximity to expiration means your put is affected much quicker from volatility in stock price
@@garryanderson9513 Thanks for the reply, I love passing on useful info.
Knowledge is power, only IF you apply that knowledge.
@@jobobcowman5155 I'm pretty new; but it seems to me that you would only be affected by the volatility on the buyers end. I mean if you're selling ann option and the stock price suddenly shoots up or down 2% it not gonna matter if the option expires in a week or month from now right?
Great video! One of the most informative wheel strategy videos I've seen so far. Thanks a lot!
The burrito is in the fridge.
That's the secret password. LOOL
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Very nice again. thanks for the clear and detailed discussion. Been using CC and doing well. looking at using CSP to get back in, but want to move a little quicker than waiting to get called out.
You really make it fun to learn this stuff
Can you subtract the premium from your cost basis from the covered calls you are selling?
Thanks! Great video and production. Solid info and delivery.
Once you've been assigned and you have cash on the sidelines, and still bullish on the stock, could you sell a Covered Call out of the money, and sell another CSP to collect premium on both?
I could watch this stuff all day.
Same
Hey! What trading platform do you find to be the best? Which ones have pre market and after market hours? I’m new to this and I’ve learned a lot from your content. Thanks for doing what you do!
After watching both of your excellent videos on running the wheel, and the one on LEAPS options.. in your experience what generates the BIGGEST gains?
I understand they are two completely separate strats, but is there a benefit to doing one over the other? I’m thinking about doing both simultaneously so I have both income generation tool and a long term wealth building tool. The income generation tool can also pay capital gains taxes on my LEAPS options that I either exercise or sell the contract before expiration
I have a $50,000 LEAP $500 premium and selling Covered Calls on it. Strike is $950. Stock was at $850 when I bought it. It’s a 2 year LEAP. Question is usually my risk tolerance when selling covered calls is to set the strike higher than my average cost per share. In this case my first covered cal I set exactly at my break even if $950 and collected $2,000 premium. Now for my second CC being the stock has dropped to $775 I can get a $4,000 premium if I set a $910 strike but that’s lower than my break even. My question is how likely is it that I’ll be assigned at $910 strike when the buyers break even is $950? Reason I ask is I’m confident it won’t get to $950 but maybe it will get to $920 would they exercise if they haven’t hit break even and if I’m assigned I’d take a loss since strike $910 and my break even $950 although I guess I can deduct the $6,000 in premiums and I’m still ITM but still I’d rather not get assigned. Thoughts? I’m new at this
this was a great video. Do more real time demos- they are more interesting.
You're such a gift. Subbed and liked the video, rang the notifications bell
Hey man, been watching a lot lately. Do options trades require clearing house "clearing" - reason I'm asking is my Fidelity doesnt have me down as a "Day Trader" therefor, I have to wait for the clearinghouse to give me my funds after I sell before I buy again... like 3 days ish. I have 2 "pattern day trader" strikes, and 1 more wont be good for me LOL
Any thoughts on wheeling covered strangles? They're basically a combination of CSP's and CC's. Also known as the triple combo.
@InTheMoney
I recall you saying that when you STO a cash secured put on a margin account, no margin interest is charged but the margin is reduced by the collateral necessary for the trade. I am wondering if this is correct and assume that margin interest will be charged if I get assigned and do not reduce the margin I am using?
Only question is... if the covered call is going against you. Do you wait to close your CC to sell a new one when the stock price hits your strike price or when the credit you collected evaporates? For example, you have a CC sold on WMT strike is 100... underlying is 95... You collected 100 bucks of premium... stock moves to 100 in a week... 20 days to go... you expect the stock to continue going up... do you get out when the underlying hits the strike regardless of where the premium is or... do you bail out when you are under the water on the credit?
Thanks for the info, Adam. Really great and simple to understand videos! After I got hurt by GME, I've been hammering OCGN and AMC CSP's and been doing quite well...
Thanks for all the discussion on the 30-45 vs different dates. That was the part in your wheel video from October that I wasn't quite jiving with but the way you explained it here helped match with why I was feeling hesitation to start at that far out.
I like that he finally flashed his Robinhood account balance. Gives him a little credibility.
Options still hurt my brain, I still don't fully grasp all the concepts. Though thank you for your video, it's helping me figure this shit out. I'm about to check out what other videos you have.
Is it less risky to CSP on dividend paying stock or ETF bcos it is less volatile?
Really good video. I have watched this one a few times as I am new to options. I will most likely watch it a few more times. Thank you for the great content.
+ 1 5 4 1 2 3 3 5 3 7 3
Thanks for the informative videos. I love your content I have been doing the wheel and collecting premiums for 2 months now. I want to sell CSP on SPY as they have more frequent expiration dates and higher premiums but would have to sell most of my stocks to afford it. Do you think it would worth doing the wheel using margin or is there a risk involved I am not taking into account?
Gains?
isn't weeklys better than 30-45 days as you get more chances of puts in a calendar month?
Awesome content! I love rolling your contracts weekly. I
I have to ask:
1. Can you give some details on your keyboard? It looks amazing.
2. Is this your preferred strategy?
3. Do you use discord or another community platform for investment strategies?
Love your channel. Isn't it true that calculating the break even of the wheel strategy is more complicated than adding up credits/debits and shares of underlyings bought? If you roll when your option is below breakeven, don't you actualize a loss that also needs to be considered?
@@scottreesetradinginvesting7936 thanks for the reply
Nice explanation, but hard to follow without any kind of illustration. Even just a whiteboard or a doodle app would help tremendously!
These videos make so much sense. Thank you
How do you feel about selling puts on etfs like HYG or JNK? Corporate bonds are kind of range bound and tend to return to where their yeield is aro7nd 5/6 percent. Seems like you can get good vol, good dividends if assigned, and mean reversion. Thoughts?
what about selling a put and selling a call at the same time?
I heard its a good strategy
I love the content man! Good explanations and u use RH 💯
@Inthemoney How did you learn to trade? You have such in-depth knowledge and are great at explaining. Do you have a video with the best resources you used to learn? I am 38 and only getting into stocks now. I have a lot of catching up to do if I want to succeed.
Great video on some more specifics.
So if I is my margin to sell puts that are OTM by a decent amount for extra cash, that something you’d recommend?
Another 45 extra contracts on certain stocks could be a good amount more and easily pay off the interest that the margin you’d have to pay
Hands down the best channel on Options trading. Clear, concise and not condescending. Do you recommend using the wheel strategy as supplemental to collecting dividends or as a substitute? I have ABBV, MO for dividend income and been selling covered calls to boost income. So far so good.
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How can you find the delta for an option before you place the order? Thanks.
@@scottreesetradinginvesting7936 thanks I had to go to the settings. Thanks for the reply
can you make a video going over how to use your spread sheet?
Been doing this wheel strategy for a few weeks and lost 400$ last week.. mainly due to playing the wheel with Hertz. But during the weekend RH notified me saying I lost 400$ turns out. The stock went from 1.68 to .70. And got delisted. Oh well.. no more penny stock plays for me lol. It's nothing but tissue paper
Why hertz whyyyy try it on a stock that isn’t going bankrupt, amd or apple.
This is a prime example of what NOT to do when running the wheel. You picked a crappy stock to start with. Learn from those whose fail.
@Julius Chinn Chicken yea I haven’t tried the wheel strategy yet but when I do I know I’m gonna choose a reliable stock, if you choose a good steady growth stock it seems hard to lose
Lol. Guys com on! Your taking my $400 loss as a end all situation. I love to experiment. Especially with a good chunk of money. Hertz was one of those stocks I fought myself on and decided to just play it until I cant .. turned to be quite literal. Luckily the losses are write offs lol. Ok back to the RH game. 20% roi in a week works good for me.
Since I've started doing this RH thing I've been able to watch the market makers manipulate everything drastically . I was about to put on a deb spread for a year out deep ITM and right before I watched the price of SPY, and a few more drop. SPY went from 330 to like 115 and I watched Amazon go from I think 1200 to about 300. Prices are like testicles. They bounce uncomfortably on occasion.
I felt that in my soul when you bought $13k of Walmart that you didn't want. hahaha. How long was the off-camera decision-making process for that one?
I'm new to trading... even when I start an order particularly on margin my heart starts pounding (I hate leverage trading with a passion because of this), so thanks for doing it... I'd be shaking the entire time thinking okay... need to close out of this at least break even...... I kept looking the phone thinking that... don't get stuck in this.
$13K is a big position to jump into. Particularly if its using margin with leverage.
And if you didn't even do a TA and decide it would be a high probability trade.
I guess the good news... wally world is a really a decent company, you can't go too wrong... it's that margin/leverage that's the concern.
What is and how do roll your position?
Your cost basis spreadsheet only works with one option. If you buy multiple of the same option it seems to break? Or am I doing something wrong? I bought 6 options on a stock and it has my " sell above" at 84.xx$
Hi Adam, Love your explanations of everything options. One thing I notice, is you mention rolling your option out 2 weeks a month or even more. I notice on my E*TRADE account that different stocks have different expiration dates. Most of stocks will have monthly expiration dates. Is this and E*TRADE or level 2 issue with E*TRADE. I know you work off of Robinhood, but does it let you pick any stock and let you roll them every week or are you limited on expiration date by the stock you pick?
Thanks! You are limited to the expirations provided. It definitely will be stock-specific.
Do you have an exclusive deal with robinhood? If not can you show how to roll on Webull please
Question.
If I like a certain stock and do not mind owning it, BUT cannot afford paying for 100 shares of said stock.
Would it be better to just do a PMCC and repeat every time it gets called away ( or roll out the CC to a later date. )
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