The Wheel Options Strategy Performance Report | Review Of My Trade Performance Over The Last Month
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- เผยแพร่เมื่อ 5 ส.ค. 2024
- The Wheel Options Strategy Performance Report | Review Of My Trade Performance Over The Last Month | Coffee With Markus | Episode 85
Intro: 00:00
The Most Important Metric When Trading: 2:36
"SPC Profits" - Must Haves If you Plan To Trade For A Living: 4:55
How Exactly I had 22 Winning Trades In A Row Using The "Wheel Strategy": 8:45
"The Wheel" Strategy In Detail: 27:48
How YOU Can Take The Exact Same Trades: 43:55
Deep Dive Q&A: 53:20
Q: With TQQQ plummeting, thus far, would you still want to hold it until tomorrow? 54:10
Q: When selling covered calls, if the stock closes well above the strike price, what happens to the negative premium equity above the strike price at expiration? 55:51
Q: How do you determine what strike price to sell? 57:37
Q: What about the days the markets are closed? 1:00:53
Q: What’s included in the Mastermind, and how much for that? 1:01:45
Q: If you get assigned, how long do you keep the stock? 1:05:38
Today, I'm going to talk to you about my trading from last month...and the cool part, I'll show you exactly how I did it.
So before we get started, we have to talk about today's sell-off. If you joined me yesterday, this was exactly what I warned of: profit taking
In yesterday's "Coffee With Markus" I said I thought it could be very likely we would soon seen investors and traders start to take profits after what turned out to be the best month since 1984.
So is this going to turn into a full blow crash...well, we're going to just have to wait and see on that one...
Now for our main discussion: How I Made $,548 Using "The Wheel" Strategy
1) The Most Important Metric When Trading:
- So let's start with what's it's not, and I'm sure this will surprise a lot of you. It's NOT your winning percentage.
- It's NOT the average profit per trade.
- It's NOT the profit factor
- For Me, It's Profit Per Day (PPD)
2) "SPC Profits" - MUST have them if you plan to trade for a living.
- Systematic
- Predictable
- Consistent
3) How Exactly I Had 22 Winning Trades In A Row With "The Wheel Strategy"
- Trading Options (If you're new to options check this out: www.rockwelltrading.com/101
1) Time Decay (Theta)
2) A Lot Of Options Expire Worthless (Look At It Like Insurance)
4) "The Wheel" Strategy In Detail
- Find a stock that is going sideways or slightly going up
- Determine a price at which you would want to own the stock
- Make sure that you get enough premium (PPD)
- Sell the Put Option and collect the premium (like insurance)
Ex: Boeing (BA)
On August 28th, I sold 1 of the 162 Strike and received $0.95 = $95
Then today, September 3rd, I bought the Put I sold back for $0.06 =$6.00
This resulted in $89 in profits in 5 days or a Premium Per Day of $17.80/day
Ex: AIG (AIG)
Also on August 28th, I sold 7 of the 28 Strike and received $0.28 * 7 = $196
Then today, September 3rd, I bought the Puts back for $0.03 * 7 = $21
This resulted in a total profit of $175 or a Premium Per Day of $35/day
Account Size: $50,000
Goal: $100 per day
$3000 per month
$36,000 per year
Goal: Have 5 positions in my account w/each making $20/day.
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Intro: 00:00
The Most Important Metric When Trading: 2:36
"SPC Profits" - Must Haves If you Plan To Trade For A Living: 4:55
How Exactly I had 22 Winning Trades In A Row Using The "Wheel Strategy": 8:45
"The Wheel" Strategy In Detail: 27:48 How YOU Can Take The Exact Same Trades: 43:55
Deep Dive Q&A 53:25
Top Questions & Comments:
Q: With TQQQ plummeting, thus far, would you still want to hold it to tomorrow? 54:10
Q: I hear the maximum amount of decay is the last 3 weeks, should we sell 3 weeks out? 55:09 Q: How do you determine what strike price to sell? 57:35 Q: What about the days the markets are closed, regarding premium? 1:00:53
Q: How much money do I need in my account? 1:02:42
C: Out of every person who has taught options trading over my 7 years of trading, Markus is the most informational and straight to the point. I’d recommend his book. 1:07:51
Q: Do you also provide the same strategy for stock trading? 1:09:52
Thanks Markus for all the video and for sharing this platform, with your knowledgeable trades. I am excited to get started and in conversation with your support team. The only downside is that I am watching this video now, else I would have picked this amazing offer when you had launched 2 months ago. Any chance you may assist your neighbour in Canada by extending this original offer of the annual plan with Theta King, Wheel training and the wheel calculator. Thanks in advance.
I feel like you have so much patience, explaining all of this to us! Love it and appreciate it.
Hi JRInTroy, thanks for watching. And thanks for your feedback. Much appreciated. "See you" in the next video 👍
Gives me a lot of Hope, Thank you Markus. Appreciate all your assistance and teaching! Keep up the good work. 👍👍👍👌
I only see educational videos every now and then that really get me excited. This is one of them. Markus, I've learned a ton from you. Thank you!
I am glad to know that. :)
This is the strategy that I feel comfortable. I don't care when there's a big drop in the stock market because you can control your shares. Unlike using credit spread, bull put spread, iron condor strategy or whatever, it's difficult to sell or buy back if your underlying stocks are not liquid, and if there's a big drop in the market you need to spend time fast to adjust or even wipe out all your account if you are not careful. Thanks Markus that I've found your channel, simple and effective selling call/put strategy. Since I started I've noticed my account always in green because the call & put would balance the volatility in the market. You're so generous and have patient to explain all these stuff.
Awesome! I am glad that your find this helpful. ;)
Out of all the "noise" here on TH-cam, you're definitely a voice that stands out above the rest! Thank you for your knowledge!! 👍👍
You are welcome! I am glad that this helps! :)
I love your teaching style, thank you.
Hi Cristiano Oppo, thanks for watching. And thanks for your feedback. Much appreciated. "See you" in the next video 👍
This was a priceless video. Thank you Markus!
Hi James, thanks for watching. And thanks for your feedback. Much appreciated. "See you" in the next video 👍
Your videos are so professional, educational, and organized... I’m shocked you don’t have 100-200k subscribers
Hi Cody Brown, thanks for watching. And thanks for your feedback. Much appreciated. "See you" in the next video 👍
Yeah, I understand only few people in line with option trading maybe because of it's complexity, unlike stock you just buy and sell.
Awesome video Markus! Your videos are the reason why I'm interested in starting options trading.
Hi Mike, thanks for the feedback. Have you already had a chance to check out my Options 101 playlist? - It might be helpful if you're new to options.
Here's the link: th-cam.com/play/PLBa3sAx-Io2m6vWuLNRz4HHUErjO8H6N8.html
Let me know if this helps.
Appreciate your content and style of training. Very good indeed. PS Is it possible to download your xls?
these are etremely important metrics for serious traders who want to do this full time as a primary income or even as a secondary income.
Yes!!!
Awesome! Thank you for watching! :)
This is Good Good Good...!
Thank you for your support, apfelsnutz! :)
I was introduced to this strategy by a close friend whom also introduce me to option trading. When I recognised that his "method" of trading is a good "strategy", he insisted that it is not considered a strategy, but instead it is his own flexible "usage" of options combination. Now I know he is a genius!!
Hey Markus, first of all, thanks for your help. Could you tell me where I can find a spreadsheet?
Hi! If you enrolled in the program you can request that from support@rockwelltrading.com. :)
what software are you using to make this video? i like the split screen where you speak on the left and write on the right side.
Hi there, the software is called eCamm Live and is a software for MAC OS. Does this help?
I do understand that you are happy to be assigned, but is there any case where you decide to roll out in time the put and save buying power? thanks
Hi Lorenzo, great question. I personally have enough buying power, so I don't roll out. But you can absolutely do it if you don't want to get assigned. Good thinking! 👍
trying to cash in on Tesla puts today was horrid. I had hoped that the average move would hold below $30 and it exceeded it. I had 3 strikes on put with 5 contracts each... and had to sell them all at end of day. Too Risky to hold overnight in the market sentiment we have. Perhaps tomorrow will be a bounce, and hopefully not a followthrough. I dont like the action I took today, but I went almost 90% cash to proteft myself. Markets like this can hurt even your options if they were too bullish. What is important to understand that each trade is an individual event. Some days are cruel, but part of the deal. Tomorrow is a new day to collect your thoughts and make better trades if they show up. Dont hunt for trades that dont exist for retribution for the day before. Truly a recipe for losses.
My primary qiuestion is, do you sell the calls as soon as you know that you will be assigned on Friday? or do you wait until the Monday?
Hi David, you have to wait until Monday if you want to sell COVERED calls. If you are trading a retirement account, you can't sell naked calls. And if the shares are not yet in your account, you would sell naked calls. I personally usually sell calls in the first 30 min after the open on Monday - IF I get assigned. Does this help?
Hello Markus,
where can I find the excel sheet in your video and do you still offer a test subscription for your signal service?
Hi! We do not offer a trial version of the Power Alert. You can check it out here www.rockwelltrading.com/products/rockwell-power-income-alerts/
So if you have 1 shares ..and selling 1 calls looking at the option chain it's says infinity lost? Please clarify..thank you
You need to sell 1 call for every 100 shares that you own since options come in "100 packs". That's probably why it says "infinity loss": when you only have 1 share, you're pretty much selling a "naked call". Making sense? 👍
TQQQ is a 3x levered etf on QQQ....it’s a LOT more risky than QQQ and that’s why the put options pay a much higher premium
Awesome! Thank you for watching! :)
You could start the wheel selling a spread yes? Selling a put and then buying a cheap put below your cost basis. Sounds logical. You’d lose your time decay but you’d be covered if the stock dramatically dropped.
Hi Billy, at first it sounds like a great idea. But when you look into it you'll notice that there's not much premium left to make it work after you buy the protective call (or put). Trust me: I ran the numbers. 😎
On the AIG example, 7 x 100 x 30 if you get assigned wouldn’t that require $21,000 available margin?
Hi Jason, yes. That is correct.
What if TQQQ were to drop so low that you couldn't sell the CALL option? Is that possible? How low would that have to be?
Hi Dallin, EVERYTHING is possible! The question is: how likely is that?
I'll do a follow-up video on the TQQQ position in the next "Coffee with Markus." Make sure to subscribe to the channel so that you get a notification from TH-cam whenever I release a new video. This way you don't miss it. 😀👍
I heard holding leveraged ETFs has additional risk for long term holds (e.g. if you get assigned the shares). Is that true?
What exactly do you mean? Leverages ETFs just means that gains and losses are amplified, i.e. 3x for TQQQ. Is this what you mean?
@@rockwelltradingservices Yes they are amplified by a fixed amount but if held over more than a trading session, their performance is actually distorted compared to the underlying.
For example if you compare the returns between QQQ and TQQQ since FEB 19 and see the difference. Instead of 3x it ended up being something like 2x. Or a better example is SOXX vs SOXL. SOXL hasn't even touched all time highs while SOXX has been beyond all time highs for several days now.
Just wondering if this affects the wheel strategy. I know it would affect technical analysis most people do (e.g. trendlines and support/resistance levels).
@@rockwelltradingservices Another great example is GUSH vs XOP. XOP is the underlying. A comparison of their charts shows the issue. I think its a mathematical problem in the way they use derivatives to achieve the leverage.
Most of the time, we only trade stocks with "The Wheel" Strategy. The TQQQ trade was the first trade in 25 trades that was an ETF.
So I can't speak for the performance of "The Wheel" with ETFs since I designed it mainly for stocks.
Does this help?
Hi, MARKUS, I love your course, but why have you never mentioned that buying or selling options can also cause huge losses?
That should be common sense when using the stock market, it can happen with options and just holding stock
Curious why you choose to sell to close rather than waiting a day for the contract to expire!
If I can close it for $0.02, it doesn't make sense to keep it open for another day to make an extra $2. Closing a trade increases your buying power and reduces the risk of getting assigned. Makes a lot of sense to me. 👍
I must say, you are an awesome teacher and with the best temperament ever. I enjoy listening to your videos and I do learn quite a lot from you, Thank you. I am more of a beginner, need to learn more, then I'll sure subscribe to your alerts.
Hi Joe, thanks for watching. And thanks for your feedback. Much appreciated. "See you" in the next video 👍
Where do we find the package in the video?
Hi! You can go here www.rockwelltrading.com/products/the-option-income-wheel/?
Ahh ok, I thought it was a different version as the landing page didn't match up
Hello
Your voice sounds alot like the radio rental guy!
Thank you! :)
I just need to get this in my head.
If Marcus gets assigned at 155 he has to cover the cost of that Option which would be $15,500, right?
Then he chooses a 150 strike price and if the stock goes down past 150, does Marcus have to pay another $15,000?
Then every time you get assigned on that same stock until the time comes for it to go up, you MUST have the cash to cover the Option contract, is that right?
I understand collecting the Premium, it's just getting assigned multiple times on the same stock I'm not cluey on.
That's correct: When you sell a put and get assigned, you need to have at least 100 * strike price in buying power in your account. You got this.
@@rockwelltradingservices Thanks Marcus. Also, the 1st night of the online seminar was great. For me it finished around 5AM! @nd day tonight.
Oh wow! That's early. Thanks for joining us this weekend!
My IRA account won't allow naked calls and puts. How about a Spread trade? Sell one and buy one further out of the money?
Ron, with this strategy, you are NOT trading naked calls and puts. You are trading "cash secured puts" and "covered calls" - and you can trade THIS in an IRA. Does this help?
@@rockwelltradingservices - If you sell a put you have unlimited risk. This is great as long as the trade doesn't goes against you. Better odds in a Casino.
Hi John, that's not correct. Let me give you an example:
For KSS (Kohl's), I sold a Put with a strike price of 18. This means that I have to buy 100 shares of KSS for every put that I sell.
100 shares * $18 = $1,800.
And THAT is the maximum risk I have in this trade.
But that risk is only theoretical and would ONLY happen if KSS goes out of business and goes to 0.
Anyhow.... the statement that you have "unlimited risk" when selling a put is incorrect.
Making sense?
@@rockwelltradingservices - no it doesn't make sense - if I sell a KSS put at a strike price of $18, (the premium is $.08) I would receive a credit of $80, my max loss if KSS goes to zero is $17,920. - not $1800. Not a very good R:R
Hi John, that would assume that KSS is dropping to 0, which I think is highly unlikely. But as I said in the video: This trading strategy is not for everybody. There's plenty of other ways to trade that might be a better fit for your risk tolerance. All good 😀👍
Selling TQQQ puts at that time probably didn't workout well? What follow-up/exist action did you take on that trade?
Oooohhhh.... I already made $400 on this trade 😀
And yes, I will do a follow up today, in Episode 90!
Watch today's "Coffee with Markus Shows" at 3:30pm ET and check it out.
Your approach to this is spot on. I think it is important for most people learning, how to do it right and not expect to make a millions per trade.
AMEN! 👍
In your TQQQ $150 put example what happens if it drops to 100. You then write calls but it may take years to get back to $150. Or never get back to $150. Help?
Hi Robert, based on past performance, it seems that it would only take a few weeks until it's back up to $150. And yes: as long as it is below $150, I would write calls. Does this help?
Thanks for all the educational videos Markus. It maybe sounds stupid but your videos really motivate me. I finally set myself a goal to work a lot outside of my study, and when I've saved enough (for my own strategy) I'm gonna try to invest it! In the meantime I study your videos and the stock market in general, so thanks.
Hi Venpai, thanks for watching. And thanks for your feedback. Much appreciated. "See you" in the next video 👍
I am an Australian resident, can I still do your calls?
Hi Leigh, we do have several Australians who are following the system. The challenge: You have to stay up late because the US markets open at 11:30pm your time.
Often we issue the alerts in the first 90 min of trading. So if you are a night owl and have no problems staying up until 1:00am your time, then you're good. If you're going to bed before 11:00pm, then you would miss the signals.
Does this help?
@@rockwelltradingservices yes it does thank you
Awesome! :)
@@rockwelltradingservices do you have something that wouldn’t require me being up at these hours? Different strategy perhaps?
What's the best strategy when the market drops so far so fast that it blows past the strike price on a stock you have a cash covered put on? Like if TQQQ falls down to 140, per your example.
Do you accept the shares at expiration (taking an immediate hundreds/thousands unrecognized loss on the position), or is it better to roll it over and buy it back and just lose a little?
All my puts were WAY out of the money, looking to expire worthless, but after today (and a potential bloodbath tomorrow) they're going to be way in the money and I'm probably going to be assigned. If so, I'll be starting out way in the hole. Selling calls to break even won't generate much premium at all.
Thank you. Truly enjoy your videos.
same
Same
Hi there, yes: you would get assigned. But as I explain in the video: If you did your stock selection right, that's a GOOD thing! Take another look at THIS segment of the video in which I explain why being assigned CAN be a good thing: th-cam.com/video/vURvjuLykI8/w-d-xo.html
The most important thing is that you don't suddenly own stocks that you don't want to own.
Making sense?
Hi Kurt, see my answer below. Does this help?
@@rockwelltradingservices What if it keeps dropping and doesn't bounce back? Do you set a stop loss at some point?
I don't know about you, but I am doing the wheel...
Hi Guillote 99, thanks for watching. And thanks for your feedback. Much appreciated. "See you" in the next video 👍
Hello, I love this strategy so much! I love the income calculator that you have. I was just trying to figure out how it all works and was curious about what "Stock gains for holding period" and "Stock gains if exercised" is referring to? Can anyone help me understand what that means? Thanks in advance!
The wheel is a negative skew strategy: lots of small positive returns with periodic large losses. What do the losses look like in real life? How big are they in this $50k account and how often do they come? Also, with cash secured put writing, it’s capital intensive. Typically, what do the notional value of the sold options (sum of (quantity x strike x 100)) look like for this $50k account? Lastly, what happened to the portfolio during the March 2020 crash? Thanks in advance for any hints!
Hi Markus. As I live in a country outside USA timezone, your alerts will be issued whilst I am asleep and when I awake, the US Options Market will be closed. How long after the alert is issued will the alert still be valid and can I expect to still receive the same amount of premium say 8-10 hours after I receive the alert and probably at the open of the next trading session. Is this a strategy that is suitable for overseas traders?
Hi Peter, thanks for watching the video! And I'm afraid, it might not work for you. When we issue an alert, we issue it in such a way that you can get filled within 30-90 minutes after issuing the alert. Sometimes, it's possible to enter the next day.... but we can't guarantee that. So if you try to place the order 8-10 hours later, the trade might have already "run away".
Does this help?
at 35:42, you said your making $66 from TQQQ. That is incorrect. That is your premium which is $66 for the whole expiration cycle. You would only make $66/day if that was your theta decay
Hi John, it is correct since the expiration is Sep 4th. This means that there's only ONE day to expiration, so the Premium Per Day (PPD) is $66.
Making sense?
Just a quick note: there are about 21 trading days a month so $100/day x 21= $2100/mo x 12 mos = $25,200/ year or 50 percent return per year, which is still good.
Yes, but I'm holding my trades over the weekend. I'm not day trading. If you would day trade, then your calculation is correct. But since I am swing trading, the correct formula is using 30 days per month or 360 days per year. 👍
You'd have to pay an accountant $36k just to keep track of all this for taxes. I can't even fathom how much paperwork his involves.
Thanks for not being a Tim Sykes
You are welcome! I am glad that this helps! :)
I liked this guy so much until he started selling his course at the end lol
What is so wrong with that?
Helllo Markus, thank you for you excellent information. Would you send me your book for free, I am leaving in France ?