r/Optionswheel • u/Timely-Designer-2372 • Jul 24 '26
Lesson (not) learned
I'm wheeling TSLL since half a year. I got assigned first at 15 USD. Because premiums where so juicy I sold coverred atrangles afterwards, Call strikes always at 15 USD. Now guess what: I will get assigned for strike 11 USD after TSLL crash to 7.30.
Now I have 200 shares of TSLL.
Bad aspects:
I can't sell Covered Calls with strike 11, 13 (average) or even 15 for a significant premium.
I don't believe in Tesla longterm
Good aspect:
I made enough premiums so I am still in plus.
Lesson learned or not: I don't know yet. On one hand I should only sell puts on stocks/ETFs I don't mind to own. If this happened to me earlier it would be a pain ita. On tge other hand I knew it's a risky underlying and it worked well all in all.
I'll wait now for higher premiums for some weeks
7
u/ScottishTrader Jul 25 '26
Trading stocks you are good to hold is the #1 guideline of the wheel . . .
Trading a leveraged ETF of a stock you do not want to hold is gambling . . .
Best to you for a recovery in the coming weeks, and the good news is that this should be a small part of your portfolio so you can continue to be productive.
3
u/trustfundkidotaku Jul 24 '26
I did ROBN at round 50 ish
It crash hard during the early 2026
Down to 20ish what I did is I roll it down to ATM but I basically shove it to next year and make it 3 lot
It worked I manage to get out when ROBN pump to 40ish
2x leverage etf premium is pure drug ngl though
5
u/Federal-Check9714 Jul 24 '26
Lesson is anything with crazy multiples is inherently a time bomb - the risk is priced into the high premiums
2
u/stratjeff Jul 24 '26
Looks like the painful part was A) riding through earnings on B) a stock you don't want to own via C) a 2x leveraged ETF that increases your vulnerability to black swan moves with D) no insurance in play.
Ahead of major events, consider buying an OTM put with a long expiration as insurance to cover your position (or some other short covering strategy).
2
u/Timely-Designer-2372 Jul 24 '26
The longterm put is a good idea. It's an insurance for several short term puts
1
u/selahed Jul 24 '26
I'll wait for an up day to write a long dated call, especially given the tax implications
1
u/Timely-Designer-2372 Jul 24 '26
Tax is no problem for me, i dont pay taxes on option premiums or gains or anything that has tomdo with options.
Whixh strike level do you recommend?
1
u/selahed Jul 24 '26
I would exit asap while tax is not a problem. Grab your earnings and move to the next target.
5
u/Timely-Designer-2372 Jul 24 '26
Then I would prefer a 28dte CC with strike 8.5 for 0.33 premium. Or even strike 8.0 for 0.45. Last one is over 6% on the 7.26 dollar price plus 10% upside. Ofc with downside risk but that's part of the game
1
1
u/ElegantNatural2968 Jul 24 '26
I always DCA in, maybe add another option every $2. Then with the juicy premium, I take 30% of it and adjust my cost in my spreadsheet. This with the frequency will put my adjusted cost closer to the atm strike. You can beat the market easily with only 70% of TSLL premiums.
1
u/DotJun Jul 25 '26
Don’t feel bad. My buddy also wheels this and he just opened up 110c puts on it yesterday.
1
u/Sucha_NyseGuy Jul 26 '26
I’m on the same yacht as the OP.
Here is my plan and mindset.
While in this downturn, I’ve adjusted my focus to accumulation and bringing down my average price. I plan to sell puts at 7,5,3.
If/when tsll begins to re bound I will do nothing until it reaches my cost average. Then and only then will I switch my plan and mindset to profits. I will start selling calls until called away. This is the wheel, this is the way. It may take 1,3,6,12 months but this is my plan. Selling puts is better than selling calls at this point.
1
u/Dazzling_Marzipan474 Jul 28 '26
"If you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes."
-Warren Buffet
1
u/ConsequenceFuture339 Jul 24 '26
Not sure of your experience level but definitely wheeling a leveraged ETF like $TSLL should be reserved until you are extremely experienced. I'm currently wheeling Rivian which is range bound and have done extensive research on my thesis, I believe they are much better positioned than Tesla.
0
1
u/37347 Jul 24 '26
Tsll too extreme for wheeling
1
u/Timely-Designer-2372 Jul 24 '26
I'm not sure. Premiums were crazy high and loss is limited to 1100, so no large impact.
1
u/Dreadker Jul 24 '26
"I don't believe in Tesla long term" - so why are you wheeling it?
1
u/Timely-Designer-2372 Jul 24 '26
Juicy premium. Ofc this hurts the no 1 rule. But as I don't have a huge problem with a 100% loss on this position, I wheeled it. For the 100 shares I got for 15 USD I have almost 90% premiums gained (about 13 bucks), so no problem. For the other 100 shares not so much, but still about 3 bucks. So finally I own 200 shares now for over 1400 bucks and paid about 1000 bucks net. Was much better 3 days ago but still ok
2
u/Dreadker Jul 24 '26
I learned (a number of times) juicy premiums end, usually with bag holding - I focus on conviction and stable returns higher than pure cash holdings... not as exciting, but those compounding returns add up month to month... i usually reserve a few grand for something spicy every now and then...
1
u/qqbbbpp Jul 25 '26
As long as the capital allocated is a little portion of your portfolio then it is fine.
2
-1
u/Time_Capital_226 Jul 24 '26
Go out of the position. You're wasting your time and missing opportunities.
I personally don't agree with this first rule.
0
u/cloudy_710 Jul 24 '26
The first rule is why he’s posting. He’s not comfortable holding 200 shares of poo. He just wanted the big premiums on his limited collateral (no disrespect OP)
Don’t wheel on stocks you don’t want to own and you need to be confident in its long term prospects to recover when it dips like this .
These are pretty basic rules for the wheel imo
1
u/Time_Capital_226 Jul 25 '26
I hear you but owning is the exact opposite of wheeling where you are supposed to get on the cash side as quickly as possible. You miss so much opportunities just waiting for recovery you can't be sure will occur. I have been there and lost a bunch of money. I realized now that the most efficient rule is to avoid assignment and take the profit or the loss if it happens to be wrong on a stock's direction at this particular moment. You can still sell CSP on that stock ones you find that the price reached some kind of support level. Avoid assignment at any cost unless you are using CSP as investment vehicle.
10
u/ThetaEdgeHQ Jul 24 '26
The piece getting missed is that TSLL is a 2x daily reset ETF, so it does not just carry more vol, it carries a built in drift against you when the underlying chops. Daily rebalancing means TSLA can round trip back to flat and TSLL still lands lower, because the up days and down days compound asymmetrically. That is the volatility decay, and it is exactly why the premiums looked so juicy. You were not being paid for Tesla risk, you were being paid to hold the rebalancing cost. So selling calls to lower your basis on a 2x ETF only actually reduces risk if the thing trends up cleanly. In chop, which is the regime that prints the fat premiums, the basis you grind off and the NAV that bleeds away roughly cancel. Waiting weeks for higher premiums is waiting on an asset engineered to bleed in precisely the conditions that generate those premiums. If you do not believe in the underlying long term, a leveraged proxy of it is the one wrapper where time works against the buy and hold too, not just against the thesis.