Some Basic Wheel strategy items - taken from TF - to help start to create a guide and resource.
Bullet Points -
From @! Kryptek, “if you’re wheeling I’d suggest having some high % premium and some low % premium ones, the low premium ones are the consistent producers every month and it can ‘somewhat’ cover your high premium red positions”
“the higher % the premium the more likely you get yourself into a red position that you may have to hold for years”
“a wise man here once told me, the theta gang game requires you to have the tenacity to stare at red positions”
“with the exception of companies defucts, the wheel will eventually be profitable”
@internetkings “this will give you some basics - https://www.thewheelstrategy.com/ no need to sign up the bulk of the basic info on the front page”
@kasheem How to Trade the Wheel Strategy - YouTube
The best way to start a Wheel is with a CSP (Cash Secured Put) and keep writing and selling said Puts until you are assigned, at which point you would sell the Underlying as a Covered Call -
@dibbles has a niffy spread sheet that will help track these along the way
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Theta gang 101:
For anyone looking to get into this I highly suggest learning everything you can about options. I’m no expert and have plenty more to learn but gonna give my basic understanding to help bridge any beginners into the higher level ideas in here and throughout the forum. Options trading is all determined by the Greeks: Delta, Gamma, Theta, Vega, and Rho. The primary focus of Theta gang strategies is of course theta, but it really all rolls into one. Instead of looking for a stock to go up or down to dictate your profits, you are selling an option contract and hoping to just collect some or all of that initial premium and close it out at a good level of profit after theta has lowered its value.
Theta is the value an option might lose each day toward expiration. If you have an option that is valued at $1.00 and it has a theta of -$0.10 it will decrease $0.10 daily if it stays in its current range. This value will change if it goes further in or out of the money. In general theta gang strategies are trying to sell options and let theta eat away at them. There is probably a strategy for every conceivable event, but IMO the best intro to theta gang is the wheel and I would suggest looking into the above resources to see how and why it works when it does.
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I can’t recommend the Youtube video linked above enough. It’s very helpful in explaining the strategy. I also have begun using the spreadsheet that he demonstrates. You can make a copy of it for yourself from here: The Wheel: Adjusted Cost Basis (OG) - Google Sheets. It’s very helpful. Every time I open a position on a new symbol, I make a copy of this template, rename it to the symbol, and keep track of how much premiums I’ve collected from it so far. I find it really helpful because once you get assigned, it can get a little tricky to keep track of your adjusted cost basis. This keeps everything nice and organized.
I also run a weekly script that shows what may be the most profitable picks to begin the CSP part of the wheel at different risk tolerances. See the updates every Monday around 10am here: Wheel Strategy Weekly Thread - Best returns of CSP, by delta, for stocks between $5 and $25 - #67 by dibbles
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