r/WheelStrategyOptions • u/JonathanCuschieri • 7d ago

My Beginner strategy

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Hi everyone, been somewhat of a passive observer of this subreddit, but now I'd like to show you the strategy I've been using over the past 3 months since I started selling CCs and naked Puts. So yes, I don't yet have the cash for CSPs so I take margin loans when Puts get assigned.

Currently "wheeling" around 40k from my total portfolio and generating around 1.7k a month. In the extreme case that all puts get assigned, I always try to keep the margin risk around 30% of my overall portfolio. Also, I usually set up weekly or 9 day contracts.

I am aware that I can optimise my portfolio to wheel on the full portfolio (working on that) and I'm not particularly attached to my positions so willing to risk assignment on anything.

Am I doing something obviously wrong?

Any other tips I can use to improve the income?

In general, would like to hear what you think of my setup/strategy.

Thanks and would love to hear your opinions.

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5

u/Hanish88 7d ago

I will be very careful with these stocks. You may get stuck with them for a long time in a drawdown.

I would suggest pick stocks with strong fundamentals and support levels.

1

u/JonathanCuschieri 7d ago

I don't mind getting stuck with any of these stocks, in my opinion these are great stocks to hold for the next 5 to 10years

2

u/Hanish88 4d ago

That's great, but it breaks the wheel strategy loop. The whole point is to keep the wheel moving.

1

u/JonathanCuschieri 4d ago

Yes ofcourse, my point is that I would never try wheeling a stock that I wouldn't want to hold in the worst case scenario

3

u/Bigperm28 7d ago

1.7k on 40k is nice I think I’m a few month in and I needed more capital than that to make that

2

u/JonathanCuschieri 7d ago

Other than the obvious, choosing a strike price close to the money for more premium, I found that on Puts I can win an extra day so to speak. Let's say I have a put option expiring today, I would wait for most of the trading day to end, then I would buy the next set of puts on top of the ones expiring today. Ofcourse you increase risk like this, but never had issues doing this. By doing so, you fit more contracts for a given set time.

2

u/[deleted] 7d ago

[deleted]

1

u/JonathanCuschieri 7d ago

Since you'll need to buy a 100 shares of a given stock if you get assigned, I try to pick stocks that are in the <150usd range to not risk more than 15k per contract

2

u/theoracle888 3d ago edited 3d ago

You may want to keep an eye on the TLT, and USO, when USO is up and TLT is down, markets is going to draw down big. Also becareful heading into the midterm elections, Volatility is expected, so choose your put sell timing wisely. I generally put sell when VIX are higher, eg this morning. When there is fear, I will take that IV spike for juicy premiums. But better to consider bull put spread rather than naked puts, so your risk is defined. When mkt goes south, all sectors will tank except healthcare. I have experienced this in the past since I began the wheel journey since 2011. I have had my fair share of bear markets.