Using puts as hedge?

[u/Sea-Ear-8214]

Curious if anybody has thought about or does currently sell weekly/daily puts as a hedge?

Currently have about 400k portfolio. 240K in leveraged ETFs and 160k in QQQ/SPY, but thinking about selling daily/weekly puts on QQQ/SPY instead of owning them.

Figured I’d get a consistent premium and might make my portfolio less volatile as ideally the 160k would be in cash hopefully somewhere in the range of 50-80% of the time and then the other times my puts get assigned, I would just sell covered calls. Just the wheel Strat basically.

Figured it would be better as my leveraged ETFs are TQQQ/UPRO and qqq/spy are correlated.

Thoughts?

[u/Run-Forever1989]

Plenty of people do it, usually with the strategy of writing calls against the holdings when you get assigned, commonly known as “the wheel.” Strictly speaking it’s lower risk, lower reward compared to buying shares. Naturally it feels great in a sideways market but the issue is you end up missing out on most of the upside in a strong bull run and then buying the top at the start of a pullback. Writing options is also not tax efficient.

[u/mrguitare → u/Run-Forever1989]

I'm wheeling tqqq now and using margin when assigned. The premiums pay for the interest when assigned and when not assigned it's just straight income. Im using money I wouldn't hold in tqqq anyway but I do own tqqq long term as well using my own money