for those who are delving into the world of options, you may have heard about a strategy called the options wheel.
the wheel trade strategy is an option strategy that is typically applied to dividend stocks but for our purposes dividends are irrelevant. The strategy is basically to sell a covered strangle by buying 100 shares of a stock that you expect to either trade sideways or slightly bullish.
Here are the three steps that we need to do when trading this strategy step number one we want to sell put options and collect premium. Step number three if we are assigned, well sell covered-call.
the wheel strategy is a systematic and very powerful way to sell covered calls as part of a long-term trading strategy. The investor also needs to be willing, and have the funds available to purchase 200 shares. After selling the initial put, the put either expires or is assigned.
the wheel options strategy or the triple income strategy is an option play where an option trader tries to profit from a trade on a single stock in three different ways.
The wheel is an options trading strategy where first we are selling puts to collect premium. In the instances where we get assigned the stock, were then selling calls to collect even more premium.
The wheel is when one of your short puts or short calls finishes in the money. After you get put stock or get stock called from you and you start a new strategy based on the long stock or short stock position. For more general options instruction, go to the options industry council site here.
photo by kosta bratsos on unsplash t he wheel is a relatively simple options trading strategy where you repeatedly sell cash-secured puts (csp).
Powerx optimizer supports two separate strategies the powerx strategy, as well as the wheel strategy. And part of the powerx optimizer is the real income calculator. I set my buying power to 500,000 because that is the buying power that i have in the account.
The wheel (sometimes called the triple income strategy) is a strategy where a trader sells cash secured puts to collect premiums on a stock or stocks they wouldnt mind owning long term. If the options expire or closed for a profit without being assigned, the premiums are all profit.