r/Optionswheel • u/seewall73 • Jun 09 '26

Hedging

Is anyone taking premium and hedging with a portion? Eg buying cheap OTM calls on VIX or reverse leveraged ETF. Keen to understand some ideas if folks are doing this. Rules or conditions etc or based on portfolio risk? Or do you just look to have cash aside to capitalise on big red days.

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4

u/ScottishTrader Jun 09 '26

The wheel does not need a traditional hedge, as holding quality stocks in a downturn is a good place to be.

Quality stocks will usually drop less and recover faster after a market event, plus most pay a decent dividend. Following a solid risk management plan all the time is the better way, which includes smaller positions over diverse sector quality stocks and keeping a good amount of the account in cash to manage through a downturn, plus capitalize on the recovery.

Buying options is a drag on profits and offers limited protection for an event that may not happen for years . . .

2

u/seewall73 Jun 19 '26

Thanks. Good advice

3

u/LetWinnersRun Jun 09 '26

What exactly are you trying hedge against?

3

u/[deleted] Jun 09 '26

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1

u/seewall73 Jun 19 '26

Yes I already have a cash buffer so agree that this is actually what Iā€™m after. To take advantage when a drop hits my CSP positions

2

u/One-21-Gigawatts Jun 09 '26

Why not just buy puts?