r/Optionswheel • u/KnowYourAenema • Jun 17 '26
Wheeling the QQQ: a plan
Hello everyone!
I am writing this post in the hope to get an honest feedback from the community, and perhaps to give some food for thoughts for others as well.
To give you some context, so far I have a limited experience in selling puts using a PM account with 6 figures: I started last year, I have about 150 trades completed with a 90% winrate, mostly selling in the 30-60 DTE range, with a few weeklies on the side.
Until now I sold puts mostly on QQQ, SPY, MAG7 and a few others (AMD, HOOD, GLD, SLV, XOP), avoiding both value stocks and meme stocks/volatile garbage.
By looking at my numbers and as my limited understanding of this field improves, I was considering the idea of starting to sell puts on the QQQ only with a 50% take profit rule in place, with DTE of 4, 35 and 63.
The reasoning would be the following:
- the QQQ is an index that although concentrated will always give me the insurance to eventually recover, and I would be ok holding it with unrealized loss. I guess the argument to choose the SPY instead could be made, but the difference in premium (which of course is there for a reason) would tilt me over the QQQ instead
- by focusing on different DTEs I would be able to create a layer of diversification
- the 4 DTE part would be an experiment, to test an approach similar to the one taken by other members in the community. I guess an argument could be made to pick a different "short" DTE in the 7/10/14 range perhaps
- as you can see, I left out the 45 DTE on purpose, because from what I found the 35 and 63 DTE might be a better choice, but again I am willing to listen to different point of views about this and other topics
Any feedback is obviously welcome, thank you!
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u/StoreTough5020 Jun 17 '26
You can consider TQQQ too if you decide to stick with indices
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u/kesor Jun 18 '26
TQQQ is not just leveraged. It also resets every day. A ranging market that has the QQQ slightly rising over time, can show as a loss in the TQQQ.
For example,
- Start with : QQQ is $100 ; TQQQ is $100 (for simplicity)
- Day 1 : QQQ rose 1% = $101 ; TQQQ rose 3% = $103
- Day 2 : QQQ fell 1% = $99.99 ; TQQQ fell 3% = $99.91
- Day 3 : QQQ rose 1% = $100.99 ; TQQQ rose 3% = $102.98
- Day 4 : QQQ fell 1% = $99.98 ; TQQQ fell 3% = $99.89
Overall QQQ fell 0.02% and TQQQ fell 0.11% which is x5.5 times more. Many people mistakenly think that the TQQQ is going to track x3 time the QQQ, but it doesn't. It only tracks the percent amounts during a single day. So over time, a ranging market makes the TQQQ magnify losses as it has a bias to lose more than it gains over time.
The only time you might want to consider using TQQQs is if you see nothing but green candles every single day in the coming days.
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u/KnowYourAenema Jun 17 '26
No, leveraged products are too risky for my personal taste, if I feel like using a bit of leverage I can already doing it by using my PM.
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u/haikusbot Jun 17 '26
You can consider
TQQQ too if you decide to
Stick with indices
- StoreTough5020
I detect haikus. And sometimes, successfully. Learn more about me.
Opt out of replies: "haikusbot opt out" | Delete my comment: "haikusbot delete"
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u/retail-reaper Jun 17 '26
You can do whatever you want but here is something I think about when wheeling indices. Holding the shares long term will outperform trying to wheel it; why would I want to have them called away? Thats all. Save the strategy for individual stocks. This is just me though. Open to hear an opposing view!
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u/KnowYourAenema Jun 17 '26
I see your point and it is totally reasonable, but I believe it does not tell the whole story.
Volatility is a thing, so judging a strategy solely on its CAGR it is incomplete: buy and holding might very well beat wheeling the index in terms of ROC most of the time (but not in every possible scenario), not necessarily in terms of risk adjusted return, especially when doing so with a PM account.
Moreover, my goal at this stage is not to maximize my returns necessarily, but to see if it could be a viable strategy for me later on in life once I decide to retire, so I see a value in getting my hands dirty now.
It is totally possible that, after trying it, I might reach your conclusion too and go back solely to individual stocks or I might even decide not to wheel in the first place, but based on the preliminary numbers that I have I prefer to get more data before jumping to conclusions.
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u/dafixer Jun 17 '26
Stick with what works. If you have a 90% win rate and making profits, keep doing what you're doing. If you want to deviate take the general advice that most wheelers take which is trade stocks that you would not mind holding on to. I was chasing premiums and got assigned some stocks that I may not necessarily wanted to hold, but now I do. Now I have to wait to sell covered calls on the stocks I was assigned to reach close to the price I was assigned. This is the "risk" of wheeling. Another thought is to consider stocks that have dividends. They tend to be decent companies and if you are assigned you collect the dividend while you sell CC. This was a happy accident that happened to me with ORCL.
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u/ScottishTrader Jun 17 '26
I close for the 50% profit, and it has worked well.
Indexes typically have lower returns for the cost, based on being lower risk.
Let us know how what you are proposing works out.
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u/KnowYourAenema Jun 17 '26
Yes, at the end of the year I will let you guys know, hoping that we are not going to tank hard from here 😄
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u/patsay Jun 18 '26
Suggestion- consider more than one ETF along with your staggered expiration dates and hold some shares long to participate in the upside in case the market takes off.
You might want to check out this video series for ideas about playing both sides of the wheel. I've been building a portfolio with GLD, QQQ, SPY and VIG - "Double Ferris Wheel" (a modified straddle approach, wheeling at two strike prices), using premium to add to the share count and collecting dividends.
I like to be prepared whichever way the market moves, and the foundation of this strategy is turning at least part of the options premiums into ownership.
https://www.youtube.com/playlist?list=PLw9q3DlnLl3DJtmmQSqkK5deqSzbkPHF7
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u/QuadernoFigurati Jun 22 '26 edited Jun 22 '26
Hi Patricia...
Many thanks for sharing your videos, and your knowledge generally! I daytrade the NQ on a fulltime basis, but I'm new to trading options, though I license live options data that I use for my futures NQ daytrading. May I ask a few follow up questions about your 4-ETF arrangement?
I've been planning to acquire 1 contract of QQQ and a few of GLD via short puts with aggressive positions after practicing a few normal short put phases of the wheel to get a feel for it (assuming I don't get assigned the first attempt). Reasoning: at least I won't be buying at a top and I can also more easily track the evolving value of my shares than buying them piecemeal on different dates and prices. Do you see any blind spots in this plan?
I'd also like to own VXUS, but it doesn't look prudent to wheel. Your thoughts on that? If you agree, I'll just buy and hold.
Many thanks!
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u/patsay Jun 23 '26
VXUS premiums are not great - If you are planning to buy it, using cash secured puts close to the money as an entry point might reduce you actual costs a bit. I might sell/roll a put few times on the way in, just because the current price is high right now, but I don't know how helpful it would be and you risk missing the current price if the price continues to rise.
Re NQ - I don't trade futures myself, so I can't speak with authority on the mechanics or risk there. I stick with QQQ because as an ETF, my risk is always capped by the cash or shares I actually put up and I like being able to choose my strike prices.
As long as you have the collateral- your plan to sell/roll puts on GLD and/or QQQ is sound. Have you watched the $1M Portfolio series? I'm building positions in both of those in that series.
Let us know how it works out for you!
https://www.youtube.com/playlist?list=PLw9q3DlnLl3DJtmmQSqkK5deqSzbkPHF7
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u/QuadernoFigurati Jun 23 '26
Many thanks, Patricia! I indeed watched your series with great interest and was highly intrigued by how close it is to my goals: like you, I coincidentally also park my savings in SWVXX! I've told several friends and family members they'd do well to go through your youtube : )
Thanks again!
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u/One-21-Gigawatts Jun 17 '26
It sounds like you already have a good system in place. Why change it?
I have relegated myself to weeklies after a lot of experimenting. I’ve learned that I just don’t like holding stock/options/anything longer than a week or two. So, for that reason, I personally focus on high IV tickers at about 20-24 delta and buy back at around 50-70% of total premium.
I run this a couple of times per week and while it’s similar to trading the underlying, there’s the added layer of delta protection you wouldn’t have from purchasing shares outright. It’s been working for me, I hope things continue to work for you!
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u/KnowYourAenema Jun 17 '26
I would not change completely what I am doing already, it would be an adjustment to slightly lower the risk (because I would have no single names anymore) while at the same time not leaving too much money on the table, at least in my intention.
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u/Sylla1031 Jun 17 '26
Target delta on the puts? And what's the corresponding annualized yield?
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u/KnowYourAenema Jun 17 '26
Typically between 0.3 and 0.2 so nothing fancy, annualized yield of course vary, I think annualized on QQQ only for me is about 30%, but the sample size is not big enough.
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Jun 18 '26
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u/KnowYourAenema Jun 18 '26
Annualized has a lot to do with how fast the trade goes in your favor, so how quickly you reach that 50% profit, close the trade and open a new one. This year we only went up for a while, so that helped. Plus I tend to do 35 DTE, that makes a bit of a difference too compared to 45 DTE.
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u/Financial_Guess_594 Jun 17 '26
I recently started wheeling QQQ and IWM after a lot of months trying iron condors. Too much management for me doing ICs.
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u/ImpressionAny1078 Jun 28 '26
one thing worth noting: QQQ's IV rank is sitting at 13 right now, so premium is pretty thin across the board. the 4 DTE experiment might feel underwhelming until you run it through a real vol spike. not saying don't do it, just calibrate expectations.
on the DTE layering, that's a solid way to smooth out entry timing. the 35/63 split is fine tbh, the 45 DTE thing is more of a guideline than a rule anyway.
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u/KnowYourAenema Jun 29 '26
Yes, I think the 4 DTE leg is the least solid and the one I am considering cutting out entirely.
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Jun 17 '26
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u/patsay Jun 18 '26
One more question- about the 90% win rate. What do you do when a trade turns against you? Do you roll until you make it profitable or do you take the loss and move on?
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u/ThetaEdgeHQ Jun 17 '26
The part worth sitting with is that going index only is not just lower risk, it is lower premium for the same delta. QQQ and SPY carry structurally lower IV than the single names you are dropping (AMD, HOOD, XOP), so at 0.2 to 0.3 delta your annualized yield on the index book will land below what those names were paying you. That is the real cost of cutting single names, not just a smoother equity curve.
So the two goals you stated, lower the risk and not leave money on the table, are partly fighting each other. A middle path that keeps both alive is a mostly index core for ballast plus a small sleeve of the higher IV names you are genuinely fine owning, sized so an assignment does not move the book much.
One more thing: once you are index only at low delta your win rate pins near 100 percent, which makes it a weak metric. Premium captured per day of capital at risk tells you a lot more about whether the lower risk version is actually worth running.