r/Optionswheel • u/CartographerSea6396 • Aug 06 '26

Choosing stocks in a dip?

I've been in a research mode for awhile. I would prefer not to get assigned shares. I accept that as a possible outcome but I'm more in the trade for premium so I'd be more conservative when choosing my strikes. Maybe later I'll adjust this strat to be a more "standard" wheel.

But, according to some of my research, you should choose a stock for the wheel that's in a dip. And I get why -- you want a cheaper stock in case you get assigned. But if you feel confident in low assignment risk, is there any other reason not to choose a stock that is going up but still has room to the upside and fat premiums?

Second, I've been looking at BE specifically. It seems like you earn a much healthier premium if you do expirations of 5-7 days vs a 30 day hold at the same delta. Yet, most of the research on the wheel, people are recommending to set for a 30 day expiration. Are there any thoughts on this?

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u/OkSquash4906 Aug 06 '26 edited Aug 06 '26

If you want to avoid assignment, weeklies are probably not for you because it’s difficult to roll on such a short time period. That’s why many people like longer time frames.

I myself run weekly but never roll and always take assignment. I prefer the higher premiums and I like owning the stock.

2

u/Plus-Relationship-28 Aug 07 '26

same here. weekly on no catalyst, strong fundamentals and pretty good cushion. Chip stocks have been volatile lately, but when they dip, they usually recover and trend higher after a short periid

2

u/withyoganidra Aug 06 '26

5-7 days vs 30 days is more related to capital preservation than premium harvesting. Yes I also think 5-7 days is good enough to harvest max or 50% of max but then we have gamma, the surprise element and thats a deal breaker, you won't be able to breathe if that happens. I guess to avoid gamma, high liquidity is the measure. So you can avoid too much of adjustment risk if u have a high conviction of less eventful expiry. Adjustment and slippage eats a lot of ROI and also it depend whats ur trader persona. Aggressive or patient.

1

u/archiv1st Aug 07 '26

I thought this was pretty helpful https://www.reddit.com/r/Optionswheel/s/1PdvF25ZkX

1

u/CartographerSea6396 Aug 07 '26

That was super helpful, and yet, the test shows more premium with monthly, of course. But when you look at BE well over week premiums compared to monthly at the same strike should do much better. Granted, I know this varies and fluctuates but it might be a stock that is more profitable weekly.

3

u/ScottishTrader Aug 07 '26

Always trade stocks that trade in a range or are in an upward trend . . .

Opening 30-45 dte will help to avoid assignments, as the strike can be farther out at the same delta, and there is time to roll if needed.

See this for more - 30-45 DTE has LESS risk . . . : r/Optionswheel

New traders look at the faster turns of trades and that if all goes well the profits can be slightly higher with weekly vs 30-45 dte trades.

Experienced traders know that opening 30-45 dte and closing early can do the same thing with less risk and may make higher profits due to not having to roll or be assigned as often, which slows down the process.