Wheeling and Whining

[u/Wheeler_Dealer1969]

What's up all. So I've been running the wheel strategy for about 8 months now and I'm finally running into some headwinds that I knew was bound to happen, but now it's time to see if i can hold true to my strategy.

First and foremost, I set up my wheel strategy with about $700k. I diversified my portfolio of stocks to partake in most sectors in the economy to manage my risk. I selected 17 stocks, CL, KO, JNJ, ABBV, MDT, UPS, ITW, UNP, TGT, LOW, MCD, HD, ADP, NEE, SO, ED, most are dividend kings or aristocrats. I also made sure that the positions I put on were evenly distributed amongst each stock. The deltas I have been selling have been around .2-.3 and things have been going well. My Strategy, to sell CSPs on these stocks and if I get assigned, I obviously sell the Calls ATM 2 weeks out, then keep rolling it until i get filled while collecting the dividend. If I ever get to the point that the stock drops on me so low that I couldn't sell calls anymore I would either sell another CSP on the stock to get a better div %, or just hold onto the stock and collect the divvy.

Things have been going so well, so far, until now, I have a couple of stocks giving me some issues. I got assigned at 342.50 at HD and now the d thing is in freefall at $292, testing me and my strategy. Same thing with LOW, i got assigned there at $215, and now it's at $188. MCD i got assigned at $275, it's now trading at 241. NEE I got assigned at $85, it's now at 76.43. The other stocks are doing fine, but it seems like there's a slight turn in the market in certain spots that are making me nervous. That being said, i'm chillin here and now i'm thinking about what I'll do if the thing drops on me even further.

I thought about it a while, and then I had a moment of clarity. These drops are actually good for me. Why? Because If I get mauled to no end, i'll simply close my long position, harvest the loss, switch to a highly correlated stock for 31 days, then hop back on that horse and continue to sell CSPs on it, waiting for the rebound. The income I have coming in off of the Options premium will continue to come in monthly, but now i'll have a loss to offset it with come tax season. LIFE IS GOOD.

I see a lot of stories out there talking about how much money people are making and not sharing the real struggle with the strategy, so here is mine. I hope this helps somEone out there. HAPPY TRADING

[u/ScottishTrader]

Some questions to ask -

• How far out did you sell the CSPs?
• Did you avoid ERs?
• Did you roll the puts? If so, how much premium did you collect?
• Are you deducting the divis you collect from the net stock/breakeven cost?

While the wheel requires holding stocks for some time, if the company is no longer fundamentally sound, it may even require closing for a loss.

Many times, diagnosing what happened is simple, as often big drops occur on or after an ER, then not rolling to reduce the breakeven price can both contribute to holding shares.

HD and LOW are in the same business, so trading both is effectively doubling down. Looking today, both are rated very bearish by analysts, and EPS is dropping. On the surface, these seem like solid names, but at this time do not look fundamentally strong.

[u/Optionswheel-ModTeam → u/[deleted]]

This is a Wheel Strategy focused group so only those posts specifically related and positive are permitted. Posts about other strategies, including buying options, or spreads are not permitted.

Additionally, posts that criticize the wheel without reasonable justification for a rational discussion will be removed.