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The Wheel Strategy on Options


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The Wheel Strategy on Options

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  #41 (permalink)
 PK007 
South Africa
 
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  #42 (permalink)
ticker2
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looks like a great run. congratulations !

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  #43 (permalink)
 musickbc 
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Could you buy say 2 puts OTM and far out in expiration to hedge against a sharp downturn and then also buy a cheap call in the same expiration as the shorts to protect the 2 long puts? Would protect against the sharp moves like the one that hit you for (1,549). I'm thinking something like Karl Domm's Safe Wheel Strategy.

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  #44 (permalink)
 PK007 
South Africa
 
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musickbc View Post
Could you buy say 2 puts OTM and far out in expiration to hedge against a sharp downturn and then also buy a cheap call in the same expiration as the shorts to protect the 2 long puts? Would protect against the sharp moves like the one that hit you for (1,549). I'm thinking something like Karl Domm's Safe Wheel Strategy.

Was thinking something similar. Will work on different strategies and post the payoff charts soon.

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 PK007 
South Africa
 
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 PK007 
South Africa
 
Experience: Intermediate
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Broker: Tastyworks, IB, Ninja
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  #47 (permalink)
 PK007 
South Africa
 
Experience: Intermediate
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Broker: Tastyworks, IB, Ninja
Trading: Stocks, Options and Futures
 
Posts: 64 since Mar 2013
Thanks: 34 given, 121 received

Closed the last position out yesterday to avoid possible assignment. Rather want to focus on a few new ideas and will start a new post soon. Therefore, won't continue with the wheel strategy for now. 6 months is enough time to get a feel for what works and what doesn't.

Lessons learned:

1. The leverage with futures makes it very risky strategy
2. After assignment, the 1 standard deviation otm call, doesn't have sufficient credit and therefore, it forces you to select a strike closer to the current price. Which is not ideal.

In any case, was good to be disciplined and keep track of the strategy with these posts. Will definitely do it again.


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