Using The Wheel Method in Options Trading for $1000 a Week

You want to use the wheel method in options trading to generate some income. That's perfectly fine and even a very viable way to make money online or make money with options. It just depends how much risk you want to take on to determine how much you can make at the end of the week or even year. You can make a full time salary with enough money in your account though.

0:00 - Intro
0:21 - Let's Get into It
0:53 - Turn The Wheel
2:11 - First Turn
3:27 - Keep it Spinning
5:00 - More for Less
5:55 - More for more
7:00 - Find the Stocks

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Think of like a car turning its wheel, you just go around and around until you get a flat tire. Think of something similar, but with options that generates income for you. The wheel method is a great way to provide some income for yourself with varying levels of capital. How does it work though?

There are a number of options you could get for this, I know a lot of the r/options subreddit likes to do 45 days to expiration on their wheel strategies, but I don’t really see a bad thing in choosing the weeklies to generate a faster wheel. Back to AMD, which AMD is a stock I would be comfortable owning, but I think the price is too high for it now. I would be much more comfortable owning it at 50 per share than the 56 it is at today.

Here’s how the wheel works. First, you need 100 * the share price in cash because you are going to be selling cash secured puts to start. A cash secured put means you need the cash to buy 100 shares of the underlying stock, AMD in this case, to sell a cash secured put. If you sold the 54 Puts for AMD that expiry the end of this week (July 24th), you could sell them for 0.26 right now or $26 total and you would need $5400 in your account. It’s not a lot I know, but AMD has a low IV currently and it is not anticipated to move very much by the end of this week. That’s step one.

Step two is, you wait and there are two options now. The first one, AMD closes above 54 and your puts expire worthless and you pocket the $26 then do it again next week. If AMD closes below 54 and your puts are exercised then this is where the wheel behinds. You now need to sell covered calls each and every week. You would own 100 shares of AMD at 54, so if you sold the 58 Calls at 0.60 you would generate $60 every week.

The next step, again two things can happen. AMD could close below 58 and your calls would not be exercised, and you would have the $60 and your 100 shares of AMD at 54. Or AMD closes above 58 and your calls are exercised leaving you to sell your calls at 58. Now you pocket the $60 plus the 58 sell price – 54 price you bought it for. Then you could go back to step one, selling cash secured puts starting the wheel all over again.

Now here’s the other thing on how you can make more with the same amount of money in your account. You would have to find a stock around the same price of $50 per share, but with a much higher IV that you would still be comfortable owning 100 shares of. The first one that comes to mind is NKLA, which has a high IV meaning all of its option contracts are worth a lot more than AMD. NKLA is trading around 40 a share, but the 38 puts on NKLA are selling for 1.50 now. That means you could sell a cash secured 38 put for $150 each week.

Видео Using The Wheel Method in Options Trading for $1000 a Week канала Jacob Fisher