I Lost Thousands Not Following Wheel Strategy Rules!

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In this video, we'll be exploring the options wheel strategy - a versatile and flexible investment approach that can be used to manage risk, generate income, and potentially profit from market fluctuations. The options wheel strategy involves using options contracts to simultaneously sell and buy multiple options, creating a 'wheel' of options positions. By using a combination of call and put options, traders can construct a position that is designed to perform well under a variety of market conditions.

This strategy can be tailored to meet the individual needs and risk tolerance of each investor, and can be used for both short and long-term investments. Whether you're a seasoned options trader or just starting out, the options wheel strategy is a valuable tool to have in your arsenal.

I will also show examples of simple wheel strategy rules you should never break. I broke one some of those rules and literally paid the price.

So, if you're ready to learn more about this strategy and how it can benefit your investment portfolio, be sure to watch this video in its entirety.

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DISCLAIMER: The content discussed in these videos are solely my opinion and should never be used as financial advice. This channel is for entertainment purposes only. Make sure to consult with a professional before making money decisions. This video and description contain affiliate links, which means that if you click on one of the product links, I’ll receive a small commission; all of which helps grow the channel! Thank you for your support!

[andreaskodyat]

If I pick a lower strike price when I do covered call part of the wheel strategy, I always add a long call trade on higher strike. Effectively transforming the trade into bear call spread. When the stock price runs over my short call strike, I will have extra profit from the long leg. When price drops further, I still earn premiums from the bear call.

[Seoulsearch]

Always appreciate your honesty! 👍 It really helps to know we're not the only ones making mistakes as we learn.

[jimvaillencourt]

Yes. I think we all have a 'gotcha' story. Or two. Mine was writing below my cost basis and being assigned early. I didn't even get the chance to roll it at expiration. And I was writing 8000 shares. Lost $15k. That still stings and I'm still writing the remainder and like you trying to dig my way out. And like you probably going to be doing it for awhile. Enjoyed the video. Keep plugging away.

[scottamolinari]

So, part of the wheel strategy is to also deal with the underlying stock. So, say you sell a covered call and the stock (and the market) starts to sell off, you sell off your stock. Then you start selling puts to get the stock at the lower prices and at a discount. If the stock and the market sentiment is still bearish and going lower, you roll the short puts down and out. So, when the stock is at the bottom and seems to be going up (ending the bear market), you close your puts and buy the stock. Then start selling covered calls again.

In other words, timing puts and calls just right to get assigned isn't the goal at all. Buying and selling the stock along with short calls and puts is to optimize gains, especially when a stock is stagnant. The wheel strategy includes buying and selling the underlying stock.

[billwou]

My biggest losses were on cash secured puts that I took assignment. This is exactly why I no longer own stocks and will always roll puts down and out if they go ITM.

[jonmayer]

Im in a similar situation with Lucid. I wrote a put at 17.50, got assigned, then the market pulled back. Ive been writing calls on it for a while but being careful to write on up days, and when the price is close to the upper call wall. I've had to roll a few times but it has been working so far.

[coachyamyam]

Great content. Thank you! I’m playing with Google, Tesla, Amazon also.

[mav]

You should continue to run the wheel even if its below your cost basis. You're already down, so taking the L officially on paper won't change anything but you will be able to continue to collect better premium to recover faster.

[theflightsimulationexperie]

This is why when I trade options, I just stick with SPY, or VOO. The premiums are decent, highly liquid and plenty of dates to write calls or puts. No need to make it complicated. The S&P index is something I know I will hold long term if I’m assigned but with individual stocks, we say we will hold until it drops and drops and drops more until we can’t take it anymore.

[stans]

You picked a stock that has been making lower highs and lower lows since 2021. This strategy works with sideway or upward trading stocks. Buying more into a losing position is the surest way to go to zero.

[nichoas]

Another great video man. Just bought your book, arrives tomorrow, super excited to read it!

[Paul-ykds]

Correct me if I'm wrong, but the reason you took this loss was just because the stock price went way down after you bought it—not because you sold calls below your basis. If you had just bag-held without selling calls, you would've been in an even worse position (still having a higher cost basis). So, I don't see the point of the rule to never sell calls below your basis. In this case, following that rule would've left you worse off.

[jeffreyfulkerson]

Prior basis was in the 40s current basis low 31s. I realize you're upside down currently but you're far better off today than had you not been trading this wheel the whole time. At this rate 3 years from now your basis will be ZERO and you'll have 100 shares. Regardless of the current price. Key is always tracking the adjusted basis.

[ynwtint]

Thanks, Brad, that's why I like your channel. you are candid about how this "low-risk" strategy got smoked. "when you are doing calls, do not write strikes below your cost basis"

[curtdalgleish]

My wheel strategy losses are opportunity costs of selling calls for winners like ORLY at 750 and MCD at 250 then seeing them rise to where selling puts at the same strike had no value.

[michaelalvarado]

Doing the same with CHPT been stuck bagholding since December 2022 trying to make some premium to recover. Hoping to not get burned

[Kk-iwck]

Don’t look at the strike look at the break even and don’t do it near earnings or dividend .

[welcometotheshow]

Honestly, I have come to the point where yoloing my whole portfolio on a credit spread on Snap until I double it doesn't sound like a bad idea, but one thing is for sure if I end up getting burnt, I will end up getting burnt lol. I did the math and I would need like 7 or 8 successful credit spreads and to be honest I picked my strike prices pretty safely. Anyway love the content on the wheel strategy, it's currently what I am running as well.

[jimjoaquin]

Thank you for these videos. I re-watch and pick up more. This video saved me, specially with VZ.

Because of you, I feel I have a better plan and more confidence...thanks!

[bravocortez]

Aye bro. When you go all in and can’t average down. That’s where you fail. You need to be able to average down and bring yourself within range of the calls options sales. Slowly dig yourself out. Take premium from winners and average down since it’s already a stock you are long in. This is what I’m trying and it’s been working.