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The wheel options strategy consists of selling cash-secured puts to collect premium while waiting to buy stock, which happens when eventually assigned on a short put. Once the shares are acquired, the next phase of the wheel is to sell covered calls, collecting more premium while waiting to sell shares at a higher strike price.
It’s a simple strategy that dampens return volatility compared to the stock itself. But there’s one simple rule to follow that can dramatically improve wheel returns during a stock correction. Following this rule will boost wheel returns if the stock price recovers, but it will underperform if a recovery never happens.
In this video, I break down what this strategy is, how it can improve returns, and the downside/risk of implementing this strategy during a prolonged bear market in a stock.
==== Video Chapters ====
00:00 Intro and TSLA Wheel Test Methodology
01:03 What is selecting strike prices with delta?
01:51 Initial TSLA Wheel Results
03:15 Wheel Mistake Visualized
04:50 TSLA Wheel Results With New Rule
06:30 The Downside of the Rule
07:45 Watch the Full Wheel Strategy Video (In-Depth)
=== Recommended Videos ===
➥ How to Trade the Wheel Options Strategy:
➥ How to Roll Covered Calls to Unlock More Upside:
➥ Options Trading for Beginners:
➥ Selling Put Options for Monthly Income:
Disclaimer: Nothing contained in our content constitutes a solicitation, recommendation, promotion, or endorsement of any particular security, other investment product, transaction, or investment. Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involve substantial risk of loss and are not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time. Past performance is not necessarily indicative of future results. I am not a financial advisor. The ideas presented in this video are for entertainment purposes only. You (and only you) are responsible for the financial decisions that you make.
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