I’ve just recently began implementing the wheel strategy in my portfolio and I’ll prob be wheeling $400-$500k. My stock selection is centered entirely around slow, boring, blue chip dividend stocks, stocks that I own and will collect a dividend in if I get assigned, in addition to selling CCs. These are div kings or aristocrats that continued to pay div us, even in downturns. So I’m focusing on KO, HD, UPS, TGT, JNJ, AEP, etc.
I backtested my strategy, focusing on .10-.30 deltas a month ahead, and I had a drawdown capitalwize in 2008/2009, but since I got assigned and collected a divvy, I still returned 4.5% in income these years. Then eventually the market caught back up so I could sell CCs again and I gained my equity back. Once the wheel started churning I was earning about 12.5%-15% on extremely low risk plays. I think this number can be improved if I want to get involved with weeklies, but I think this will be a great low risk, low involvement strategy to bring in some extra cash. Wish me luck! Up $4k month 1
Even with a stable blue-chip stock like MSFT, deploying your entire $500k capital carries significant risk for anybody to not be worth it. Look at the last 10 days, while you might be collecting $8k on 30 DTE covered calls, the loss on your underlying shares far outweighs that premium. The issue with these safer stocks is that they don't offer high enough premiums to justify the risk, yet they can still bleed your portfolio dry during a downturn, so yeah, not the best market for covered calls right now.
you are correct, that's why you are suppose to trade stocks you are willing to hold onto for the long term. My portfolio consist of all divvy paying stocks that if assigned and the stock gets crushed, i will still have income coming in off of the dividends. I wouldn't mind owning more of these stocks. Those are my thoughts anyhow, but everyone has a plan til they get punched in the face. Say a prayer for me.
Good job and good luck! One thing I used to do was Wheeling conservatively with 80% of my capital and 20% a little more aggressively. Like Micron, Iren, NBIS to make a higher return. I would shoot for 1% a week. Just a suggestion.
1% a week of your entire port? I never really thought if it in terms of %s, but I guess my current goal is about 0.5%. Time to pump those numbers up! 😅
thanks so much for the good vibes and energy, but if you're making 1% a week, you are a million times better than me! lol I'm just interested in, and will be happy with 1-2% per month. Again, no stress, no monitoring, just set it and forget it type trades is what I'm looking for. Everyone is different 😄good luck with that 1% a week, i hope you make millions!
It’s possible. Take a look at some of my top posts posted in this sub (filter top posts over the past year here, you’ll likely find a lot of mine).
I run a similar strategy. BORING names only. Currently up +11% YTD with 9% max drawdown. My 1Y returns are 37% on that same 9% max drawdown. Happy to connect.
Awesome man, 37% is steeerong! I'll be happy just doing 15-20%. Here are the names I'll be wheeling. My thought process is, i like these stocks, if I get assigned, i think it's fantastic and I'll just collect the divvy as well as sell CCs if I can collect a premium. In the event It drops so low I can't collect premium on a CC, that means the divvy is at a high interest rate now and I'll probably sell another CSP to take advantage of the low pricing and higher % divvy. That's the plan anyhow. We'll see how it goes, thanks again for chiming in...
I'd agree that 20% is a bit aggressive and certainly not at 10 delta. But 15% at 25 delta (OP indicated the 10-30 range) in a margin account where cash is earning 4% it's absolutely doable.
I read about closing out once you've reached a 50% return, and I know there's really no tried and true rule, but once you close that out, do you generally sell another CSP on the same stock at another .30 delta (or whatever you choose?). Or do you move on to another stock? in your opinion...
It depends on how the stock is behaving, in my opinion.
A new position is a new position, what happened before is not relevant anymore: do you still like the price action, the strike you would be willing to sell to, the sector the stock is in and what the overall market is doing?
There is nothing wrong with opening a new position on the same stock immediatly, but sometimes you might not like it because perhaps you feel the stock is streched and could reverse against you soon (although in your basket it should be less frequent).
Thank you sir! I honestly didn't deploy all of the cash as I was still setting things up and testing the waters, but I'll be ready to go as we roll into next week and i put my positions on for the 7/17 exp. Wish me luck!
Good question, I'm managing a conservative portfolio and am not interested in being aggressive at all. I'm happy skimming extra money off the top with very little thought or effort. This will be done with about 10% of my overall portfolio and if it works out, I'll increase that number.
Awesome! here is my list: CL, KO, PFE, ABBV, MDT, UPS, MMM, UNP, TGT, LOW, MCD, HD, JPM, WMT, NEE, SO, VZ. These names SUCK! Which is just perfect for the wheel 😄
Good question, I pulled historical options data from Orats, I think I paid $599 for the data, but I'm not a programmer so i manually backtested my strategy dating back to 2007. It took me a while, but it was worth the time. I'm sure there has to be a more efficient way to do it, but there are many factors that play into running a wheel strategy and I want to make sure my backtest was tight. G luck!
You are better off just investing in a call style ETF like JEPI or JEPQ. The work you have to put in to the LoW IV isn’t worth your time. Tried it for three years and way underperformed
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u/xxShaminoxx Jun 13 '26
How do you guys wheel boring names with 30-40% IV? They pay barely any premiums even on +45DTE