Options: The Wheel Strategy

To combine the juiciness of a "Covered Call" and a '"Cash-Secured Put"

Steps to The Wheel Strategy...

GOAL: We are about income. We don't want to be assigned per se; we just want that income from premiums to be coming in! But if we get assigned… that's all a part of the plan. If we get assigned and have to buy the stock..it's a stock that we like already…so it's all good.

Find a stock you would not mind owning and isn't expensive.
Be cautious of running options over earning call periods…things get a little crazy during that time.

Step 1: Sell "Cash-Secured Puts" (CSP)
Step 2: Avoid & Roll
Step 3: Get Assigned
Step 4: Sell Call
Step 5: Avoid and Roll
Step 6: Get Assigned (rinse & repeat, back to step 1, start a new wheel)

Your position is now flat. Review your cost basis. You should be positive if you followed all of the steps properly…lol…..Rinse and repeat.

Also "During Earnings, when you are selling, the extra-large premium that you get is because the expected volatility of the markets during earnings call is priced into the option contract. So it's good to sell during that time sometimes."

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