The WHEEL Options Strategy - Passive Monthly Income!

How to trade the wheel options strategy for passive income. Get 5 FREE Stocks by joining Webull: https://a.webull.com/i/PandreaFinance

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In today's video we are learning how to trade options using the wheel strategy. This is a simple options strategy that will allow you to collect passive income by selling covered calls and cash secured puts. You can very easily make an extra 15-20% return on your portfolio just selling these options monthly with a low risk approach. #Investing #Stocks #Options

The FIRST thing we need to understand about options is that there are 2 sides to option trading. You can either be a buyer of options or you can be a seller of options. If you are a buyer of options you are buying option contracts and hoping that the price of your contract goes up. This is usually a very risky trade because you need to be right not only on the direction of the stock movement but also you need to be correct on what price the stock will reach as well as when the stock will reach that price - and if you are not correct in all those you will essentially lose ALL your money that you invested. Now on the other hand, you have option sellers which take the opposite side of that trade- when selling options you are collecting a premium paid to you by the option buyer and you win the trade if the option buyer doesn’t get all those factors we just mentioned correct - so the chances are way in your favor for being on the selling option side. Now for this high probability of success you are taking on some obligations. When selling calls you are taking on the obligation that if the stock reaches the strike price then you will need to sell shares of the company at that price. When selling puts, if the stock reaches the strike price then you will be obligated to buy shares of the particular company at the strike price. Your goal when selling options is to collect the premium, and then hope that the stock does NOT reach the strike price by the expiration date. If the stock does not reach the strike price then the OPTION CONTRACT that you sold will lose value.

The SECOND thing we need to understand is how to protect ourselves from these obligations that all options sellers have - either having to buy shares or sell shares at a given strike price. You see these obligations can make the trade VERY risky if we don’t fully understand what we need - and that is collateral. We need collateral whenever we sell options. Anyone telling you that you can sell options naked, as in without collateral, isn’t doing you any favors because this is a sure fire way to blow up your account and even end up owing more money than you have - so we don’t want that happening - so pay attention. There are two forms of collateral that you can have. When you sell call options then your obligation is to sell shares at the strike price if the strike price is reached so the collateral that we will need for selling calls is going to be SHARES in the company. When selling PUTS, your obligation is that you will be forced to buy shares of the company at a given strike price if the strike price is reached. For this we need collateral in the form of CASH. You will need to have enough cash in your trading account to be able to BUY shares of the company - again, 100 shares for each contract sold. This leads us to the terms we should be using when selling options - Covered Calls and Cash Secured Puts. Your stock is covering your position when selling calls and you cash is securing your position when selling puts.

Now before putting all the pieces of the wheel strategy together we need to understand the third and probably most important factor of being consistently profitable when selling options and that is your probability of success - (WATCH VIDEO FOR FULL BREAKDOWN)

I am not a financial advisor - none of the above video is meant to be taken as investment advice. I am just showcasing MY own strategy and my investments should not be tried and duplicated based solely off the information in this video for risk of losing money.

Видео The WHEEL Options Strategy - Passive Monthly Income! канала Pandrea Finance