The Wheel Option Strategy Example

The Wheel Option Strategy Example | Coffee With Markus | Episode 79

Intro: 00:00
What's Happening In The Markets 1:09
The Wheel Option Strategy Example On UBER: 3:34
Deep Dive Q&A: 18:29
Q: I can't sell options because I'm trading with a retirement account, is your system not suitable for me? 18:40
Q: If you are getting assigned today, can I sell calls against it today? 21:10
Q: What happened to remaining 3 options that weren't assigned? 23:33
Q: Did the $6,000 come out of your stock or options buying power? 25:03
Q: How far will you let UBER fall? 27:55
Q: How large should an account be to start trading The Wheel 29:53
Q: How do you sell calls if you now own the stock? 30:33

This week the S&P made a new all time high and what has fueled this momentum? Well...nothing really, other than the fact there hasn't been any overly bad news as of late.

Also this week, Apple became the first company to cross the two trillion dollar market cap here in the U.S. And the hottest stock of the year TSLA continues to soar, up over 50% in the last two weeks.

There still seems to be some optimism that a vaccine could be here much faster than originally predicted, so we'll how much longer this crazy run will continue.

Now, I want to talk about a Wheel Option trade in UBER, where we were assigned shares last Friday. There was a handful of people who thought we were 'in trouble', so I thought today I would go through the trade and explain why getting assigned is just part of this strategy from time to time.

So with The Wheel strategy there are three potential trades that can happen.

The first trade on UBER, we sold 7 of the August 14th, 30 Puts for a credit of $.25/contract * 7 contracts = $175 in premium collected. So looking at the chart our idea was that we expected UBER to stay above $30/share and we would collect the premium for the Puts we sold.

But because UBER was below $30 at expiration we were then required to buy shares of UBER at $30/share. The odd thing is, we normally you would be assigned 100 shares per contract traded, but we were only assigned for 4 out of the 7.

And here is where The Wheel starts getting really interesting. So now with 400 shares of UBER, we can now sell Call options against them. So this week we sold 4 of the August 28th 31 Calls for $.52/contract * 4 = $208 in premium collected

So as long as by the end of next week UBER is below $31 we will hold onto our shares and we can continue to sell Calls against them. Now if UBER does close above $31, our shares will be called away and this is where we will start selling puts again.

And this is how the Wheel works (and keeps on turning ;)

Other Videos Mentioned During Today's Session:
The "Wheel" Strategy Explained: https://bit.ly/3ePN4qT
tastyworks: http://rockwelltrading.com/tastyworks
Options Trading 101: https://bit.ly/2V7Nf9T

Want to receive my personal Wheel trades? Join my service we're calling Power Income Alerts. Learn more here: https://bit.ly/2Epymua
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Видео The Wheel Option Strategy Example канала Markus Heitkoetter