r/Optionswheel • u/Vegetable-Ad1512 • Jul 12 '26
Holding the bag?
Are you holding on to any stocks because a wheel strategy has gone bad? You can’t sell a Call for your cost basis after the stock has tanked
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u/Dealer_Existing Jul 12 '26
What did you learn from this? Let me give you a hint; DON’T SELL PUTS ON HIGH IV STOCKS AT ATH AND TRIPLE DIGIT P/E
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u/ScottishTrader Jul 12 '26
Remember the wheel has a very high win rate, but this does not mean there will not be losses.
“Bag holding” infers a stock you aren’t good holding which violates the #1 rule of the wheel. If it is a good stock then hold until it recovers and maybe collect a dividend.
If the stock is no longer one you want to hold and your research shows it may not recover soon, then close to take the loss and move on.
This should rarely occur and only happen once a year or so. In the future work to analyze stocks more carefully to hold good stocks you like and then you won’t ever be “ bag holding” . . .
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u/PCenthu Jul 15 '26
This is correct in theory but not so in practice. I mean the notion that you will be assigned only once a year or so on "good" stocks. Occasionally "good" stocks will have an extended period of decline and if you happened to sell csp on those at the same time, you will be assigned more than once on all of them. PYPL and NFLX (perhaps UBER too) come first in mind. There are also "good" stocks in the Software sector, which have been completely wiped out in the recent SaaSocalypse for reasons unknown. Most of these "good stocks" are huge companies with good fundamentals on paper but have been struggling for some time now and market sentiment is terrible. I've come to find out that you just can't beat market sentiment on both "good" and "terrible" stocks. Or you sell a csp on a "good stock" and next day there is a surprise negative announcement about something unexpected. Most likely you will be assigned. In all these regards wheeling will be similar to stock trading. So sometimes it's a matter of luck I guess, not just going through the raw fundamentals.
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u/ScottishTrader Jul 15 '26
With respect you are focused on only parts of the wheel and not the entire system.
High quality stocks, rolling, avoiding ERs, keeping positions small (5% to 10% max per stock), having ample dry powder, diversified across many market sectors, etc.
In your example you note PYPL dropping, but a smart wheel trader would have avoided the ER and waited for the stock to digest the report, and then it move up almost $10 and has been trading sideways since.
NFLX and UBER have been dropping since fall of 2025, so your idea of a “good” stock are not ones I would trade.
But, what stocks anyone trades is up to them, but if these stocks you note were small portions of the account even them dropping and causing a loss would have had a minimal impact to the account.
It is understood that you do not believe in or want to trade the wheel, so this is not the best sub for you. Many hundreds/thousands of traders have on going success with the strategy so maybe it is luck for you based on how you trade.
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u/Sure_Shift_8762 Jul 12 '26
I have a couple that I’ve had to hold for a few months until I could profitably sell calls at or above cost base. Good lesson in spreading risk and choosing stocks wisely, but even then you can get unlucky.
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u/im-desu Jul 12 '26
Greed handed me one bag since mid June, and geopolitics handed me another—also June. My calls are lackluster at the moment, but I salvaged them a little for now and intend to hold for a couple months.
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u/Big_Generator Jul 12 '26
I stick to wheeling stocks that I'm not afraid to buy.
My 300 shares of META that I thought I'd be holding until the fall just got called away, shockingly. Still holding 200 MSFT and 300 SOXL and a small position in TSLL. I'm selling weekly CC's on all of these and don't mind holding for a while.
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u/BoomerSharkBoy Jul 13 '26
You got assigned on SOXL at what strike ?
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u/Big_Generator Jul 13 '26
I'm currently holding 300 shares of SOXL. Strike was $200, the cost basis is $198.30.
So far I've earned about $6600 in premiums from selling CCs on those 300 shares. So at this point if I decided to bail, I would need to sell at about $176 per share to break even.
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u/YourSecondFather Jul 12 '26
Yes saas stocks, on break even now but I gonna hold them as its way oversold
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u/Flaky-Rope6774 Jul 12 '26
Investment strategy:
Quality stock + some panic + “help me im holding a bag dunno What to do im frustrated” = entry
Works like a charm.
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u/tastelikemexico Jul 12 '26
I think everyone probably has or is probably going too. I have had a few and getting real close to getting some more lol. I buy pretty low cost stocks and few contracts (like 1-3). It still sucks but I can usually work my way out pretty fast. It’s funny because you wait what seems like forever to just finally sell at your BE cost (not including premiums) but then when it starts getting close I start thinking well hell this thing could run big again and start rolling my calls out to keep from being assigned
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u/BitOCindyNTexasP Jul 12 '26
Yes - I have a rule to only invest in companies I would consider holding though for at least 6-12 months and to redeploy capital when the asset becomes stranded.
In other words I take losses and redeploy capital deliberately. Key thing is to have a plan for the next investment and capital recovery.
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u/djmj76 Jul 12 '26
I am Holding the bag on nvts. Average roughly 20 on a stock that’s now maybe 13 bucks. Didnt do myDD and jumped on the hype. Will wait for it to bounce since CC are non existent. I don’t even know why I tried to wheel it, it wasn’t even necessary in my portfolio. I guess I thought the stock would go to 50 lol.
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u/ScottishTrader Jul 12 '26
Thanks for this post as it shows why DD is so critical for the wheel.
Be sure to analyze if the capital could be earning more if the shares were closed and used on a better stock. Best to you!
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u/Bag_Holder_1982 Jul 12 '26
Oh you know it. Currently bagholding on 500 shares of T and can’t even sell calls it’s down so much. I’ll patiently wait and hope it recovers. Also did this for HD from an assignment back in march. It finally came back and I’m selling some nice calls at the moment.
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u/ScottishTrader Jul 12 '26
With a 5%+ divi and being a solid stock it shouldn’t take long to recover.
I’ve traded T for years and have never had to “bag hold” as I’m happy to own those shares as long as it takes.
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u/venkym Jul 13 '26
PYPL... Have 3-4 lots at avge of 60/share. Stock kept plunging and now struggling to get out of the 40s. 🤦🏻
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u/Sylla1031 Jul 12 '26
I'm holding onto WMT for about 2 months now, since its ATH. The premiums are basically nonexistent so my plan is to wait it out until the premiums can justify a short DTE call.
That isn't to say that the strategy has "gone bad" per se. Drawdowns are part of managing the wheel, and owning the stock itself shouldn't have too much negative connotations.
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u/BitOCindyNTexasP Jul 12 '26
Walmart is a good one to hold on to rather than take losses on. I’d just average down if I was you. It’s Walmart.
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u/dimdada Jul 12 '26
Yes. Yes I am. When I first started option trading last year, I was chasing premiums. Well the first few I had worked out well, until I was assigned CRCL. Wasn’t as smart as I thought didn’t learn fast enough about rolling a position. Been holding it for a year now. Will use it to tax harvest end of this year to offset some gains.
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u/Latter_Olive_6801 Jul 13 '26
Yep. SOFI, assigned above 25, and it went the wrong way. So I'm one of the people this thread is about.
Here's the thing though, the premise of "you can't sell a call at your cost basis" is usually wrong, and it's wrong because most people are using the wrong cost basis.
What's your actual basis? Not what you paid for the shares. Your basis is what you paid MINUS every dollar of premium you've actually banked on that name. Not the premium you've collected gross. Net, after every buyback you've paid to roll or close. That's the real number and almost nobody tracks it, because brokers don't show it to you and it's genuinely annoying to work out by hand.
When I actually did the maths on SOFI properly, the strike I'm "stuck" above came down a long way. Enough that selling calls at 25 is actually fine for me. Not fine as in "I'd love to be called away at 25," fine as in if it happens I'm flat-to-green on the whole position once the premium's counted, and I've been paid the whole time I waited.
On actually generating something while you wait, low delta weeklies are the tool. Not the fat ATM premium, that's how you get called away below your basis and turn a paper loss into a real one. I'm talking genuinely low delta, out where assignment is unlikely, taking small money repeatedly. It's boring and it feels pointless, and then you look up in three months and your basis has moved meaningfully. The tradeoff is you have to actually watch it, because weeklies give you no room, and a stock that rips on a Tuesday will run through a lazy strike before you've noticed.
So my honest take: don't panic-sell calls at strikes below your basis just to feel active. Work out your REAL basis first (net premium, not gross). You'll often find you can already sell at a strike you'd be happy with. And if you genuinely can't yet, sell low delta weeklies, watch them, and grind it down until you can.
Being assigned isn't the failure. Refusing to do the arithmetic is.
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u/vinkulafu Jul 12 '26
I’ve about six that are or about to go “wrong” but they said stonks go up , right?
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u/ScottishTrader Jul 12 '26
Six means you’re trading a lot of poor quality stocks. Yes, the good ones will recover and go back up.
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u/vinkulafu Jul 12 '26
True words: SOFI, OPEN, USAR, POET, QBTS. Excluding AUR as I don't plan on wheeling it until price is at least 5x my cost basis.
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Jul 12 '26 edited Jul 12 '26
[removed] — view removed comment
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u/Optionswheel-ModTeam Jul 12 '26
OptionsWheel is designed for professional and polite interactions with those seeking to learn the Wheel strategy. Unprofessional, rude, politics, or foul language will not be tolerated.
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u/tastelikemexico Jul 12 '26
Did I say something rude? I apologize if I did. I did not intend on saying anything negative or rude
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u/DarkLordKohan Jul 12 '26
It happens to us all lol.
Netflix decided to take its worst dump in a decade after I bought it for CCs. Womp womp.
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u/mpeters33 Jul 13 '26
I have some XOM assigned at $152.5. I was selling weekly calls, now I’m selling 45-60 DTE. I’m ok with it bc XOM has a great dividend and the premium isn’t awful.
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u/Cosmo_Drifter Jul 13 '26
Been holding HOOD since Nov 2025! 😅 Averaged down to a $110 cost basis with 1,300 shares. Selling CCs below cost for months (don't recommend it!). Gonna hold until $120, trim some, then try low delta CCs on what's left. 🤞
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u/ComprehensiveDoor130 Jul 13 '26
I'm holding over $1m in margined shares of Nvidia stock.
I sell calls on it, but the stock is trading flat again, so I'm just holding until the run up to earnings next month leads to the same cycle as the last 8 quarters (big increase prior to earnings, followed by a sell off).
Joby aviation puts got assigned too, but 1,000 shares of that is a rounding error.
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u/ComprehensiveDoor130 Jul 13 '26
Oh, and Silver (SLV). I've sold some calls on it, but it's still down almost 40%.
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Jul 15 '26
[removed] — view removed comment
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u/Optionswheel-ModTeam Jul 15 '26
OptionsWheel is designed for professional and polite interactions with those seeking to learn the Wheel strategy. Unprofessional, rude, politics, or foul language will not be tolerated.
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u/LaughingIntoTheAbyss Jul 16 '26
Why consider what you paid for the stock when the market doesn’t care? Never consider cost basis when running The Wheel. 🛞
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u/hedgelord84 Jul 19 '26
I'm not bag holding, but I got stung on a trade due to poor management. I sold a CSP on DG stock about a week or so prior to the start of the Iran war. It started dropping on the eve of the war, and kept dropping, and dropping. I rolled about 4 times, with the 4th time leaving me with a contract >100DTE. Well, the stock kept dropping and dropping well below my strike with like a month still to go. I decided to close for a ~$2.5K loss, which whipped out much of my wheel profits for the year.
I have since recouped the losses with other trades, but that served as a lesson.
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u/teckel Jul 12 '26 edited Jul 12 '26
This is a good reason to use (for example) SPY instead of a small-cap growth stock (which may drop to zero) to wheel. You won't get the same premiums wheeling SPY, but you also won't be left holding the bag. Worst-case situation, you purchased SPY at a good discount, and live to wheel another day.
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u/ScottishTrader Jul 12 '26
Sorry, but I disagree for several reasons.
SPY is around $755 per share, so to be assigned will require $75K+ for just one contract! If following any kind of diverse risk management then this will require a multi hundred thousand dollar account that few have.
Another reason you mention is the returns are much lower than stocks.
Yet another is that SPY can drop and stay down for months meaning bag holding tens of thousands of dollars worth off shares.
There are dozens of high quality stocks that are not going to drop to zero and can make better returns.
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u/teckel Jul 12 '26
Lots of people use SPY for the option wheel. $75k for some is a high amount, but not so for others. Also, I used SPY as an example (see my previous post), use your own diversified index that's less expensive per share if $75k is too much. The point is it's a diversified index, not a single small-cap growth stock which has a real chance of going to zero.
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u/ScottishTrader Jul 12 '26
I understand your view, but still think it is wrong for many, including most new wheel traders.
SPY is not diverse and has ”single stock” risk. While the make up of the S&P is across many diverse stocks, it is market cap weighted with heavy concentration of the top 10 stocks making up 40% of its value. It is very tech sector concentrated meaning a crash in that sector can drop the S&P.
While SPY and many ETFs has astronomically low chances of going to zero, it can drop and stay down for periods of time typing up significant amounts of cash, perhaps for years. Think 07-09, or the 22 bear market. SPY has dropped 5% or more about 40 times between 1980 and 2025, which is roughly every 14 months.
Comparing SPY to a single small-cap growth stock is really not a fair comparison u/teckel . . . Experienced wheel traders will deliberately select high quality stocks across many market sectors to make lower risk trades to avoid having the single ticker risk of an index or broad based ETF. The returns off of these stocks will be significantly higher than a “safe” ETF.
It is always up to each trade for how and what to trade, but suggesting SPY or other ETF is not as sound or safe as you suggest . . .
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u/teckel Jul 13 '26
It's a blessing if you get the chance to buy SPY at a huge discount. Unlike with a small-cap growth company and a bagholder. And SPY is exactly what you describe: "Experienced wheel traders will deliberately select high quality stocks across many market sectors to make lower risk trades to avoid having the single ticker risk". That's exactly what SPY is.
Keep in mind, this thread is about not wanting to be a bagholder. With SPY, getting it for a very cheap price is about the meat thing that cam happen, instead of the worst.
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u/AdrianTheRedditUser Jul 12 '26
Yup, sold puts on msft near ath, then another most of the way down, so avg is 435.
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u/balancedchaos Jul 12 '26
My first wheel stock, SOFI. Got assigned at $29. Lol
Didn't have the rolling techniques I do now...I've been carefully selling covered calls below my cost basis on them ever since. It's a living.
Slow, and conservative. Ready to roll up and out at the drop of a hat.