How to Master The Wheel Strategy

[@InTheMoneyAdam]

Adjusted Cost Basis Spreadsheet: docs.google.com/spreadsheets/d/1RXNUa8-n6r06CdTCt5PxWqoMp6q1ZSZJGEicoP-pGeA/copy#gid=648757628 You can do a tradtional IRA (where you deduct contributions from your taxes but will pay taxes on earnings later, but there's no income limit) or backdoor Roth IRA to get around income limit for tax benefits as well. There may be other tax-advantaged account types I'm not familiar with that allow options trading. It's important to note that if you sell enough premium through covered calls even while the stock is below the actual cost of your shares, you can end up making more than if you wait to sell covered calls above the cost of your shares. That's part of the benefit of your adjusted cost basis: it allows you to sell covered calls BELOW where you were assigned your put, and it gives you the potential to sell so much premium through covered calls that you'd make more money being assigned below the actual cost of your shares than if you waited for the stock to recover to sell covered calls above it if the stock has tanked. Ya kinda just have to think logically about each situation, but view your adjusted cost basis as the absolute bottom of where you'd sell covered calls.

[@pazuzuxx]

What if I sell covered calls WAY below my cost basis for extra premium and repurchase the 100 shares as soon as they get called away? If they do get called away. Is that good idea 💡?

[@pazuzuxx]

@@thomasd5488 Thank you. Excellent info.

[@1969TxCowboy1]

@@pazuzuxx I think that would be considered a wash sale if you repurchased the shares at a lower price after they were called away.

[@thomasd5488]

@@pazuzuxx "Is that good idea" One strategy that MOST KZbinrs DON'T teach, is how to safely sell a covered call that has a strike price WAY below your cost basis, AND still avoid assignment, so you don't have a REALIZED capital gains loss. You already have a paper loss because the share price has already fallen way below your purchase price. If you own a stock with a cost basis of $100 and the stock price has fallen to $70 through no fault of the stock fundamentals, but was pulled down with the rest of the bear market, it will eventually recover. If it is a dividend stock, you at least will earn the dividends while waiting for the share price to recover. If you want more return on your capital than just the dividends, then you CAN sell a call, WAY BELOW your cost basis, so you can earn a decent premium. I don't have a specific stock to show as an example, so I'm going to throw out some hypothetical numbers. You sell a covered call with the $72 strike price, with a 5 day expiration, for $0.40, or $40 per contract. That is an annualized ROI of 40.5% Assuming you could repeat this 52 weeks in a row. Nothing is ever that easy. On Thursday, the stock price has rallied to $75 and your $72 CC is 'in the money' and if you let it expire, you will only be paid $72. Not what you want. On Thursday, before the market closes, roll the CC strike price up to $73 and out to an expiration date that will earn you a small net credit. You get PAID to BETTER your position, and avoid assignment. IF the CC is STILL 'in the money' on the Thursday before expiration day, roll the strike up to $74, and out to an expiration date that will earn you a small net credit. AGAIN, you got PAID to BETTER your position, and avoid assignment. Even if the stock sits at $75 per share for a year, you can earn HUGE weekly premiums, by selling 'at the money' strikes. As long as the CC is STILL 'in the money' on the Thursday before each new expiration day, just keep rolling up one strike, and out to a far out enough expiration, to earn a net credit. Rinse and Repeat, over and over, even after the stock price, and your strike price has risen above your purchase price. As a matter of fact, even after the CC strike price, and the share price are ABOVE your cost basis, or purchase price, IF you are a BUY and HOLD dividend stock INVESTOR, that likes to earn dividends, you can continue rolling, to continue earning premium. All stocks eventually take a breather, and level off for a while. This gives you the opportunity for your 'in the money' strike price to catch up with the share price, so you can earn larger premiums by selling 'at the money' strike prices. Hope this was helpful.

[@antonioferrer5882]

Get well soon, More power, God Bless you.

[@DCJimS]

Glad to see you are back making videos brother! Get better soon. We are all hoping for your complete recovery soon.

[@BradFinn]

You’re a legend Adam! Glad you were feeling good enough to make this!

[@stockmarketreplay6241]

First time commenting. 2 years ago you changed my life. Thank you for everything. You are the best

[@Slydeish]

Mad respect with you getting back to work Adam. Mad respect. Stay strong Brother.

[@donkeywhistler]

@miragarcia2428 go away

[@miguelrode]

Good to see you back, Adam! I wholeheatedly agree with your point - I honestly don't even keep a record of adjusted cost bases for my assignments - just the actual cost. If I'm forced to sell calls under my CB because the underlying tanked, I use delta as my compass and roll to avoid assignment as much as possible. Something I've learned is that you have to keep meticulous records of all your assignments, because your broker will adjust the CB of your shares by the amount of premium you received for the assigned put. So you can't rely on a report from your broker to figure out your actual cost basis.

[@rrpuppe]

Glad to see you back on the horse. Hope you and your brother are doing better. As a long time investor, I like to see young people with a solid grasp of the markets. I am pretty decent, but you teach me and you are a fantastic teacher. As a former ICU and mental health nurse, I wish you well. What a journey. Thanks for sharing your insights. I hope it helps you and others will learn from it.

[@Couchlnvestor]

Good video Adam👍🏻 I’ve been trading the wheel strategy for a while, it is a money faucet! Stocks, forex and options put together makes the best business model, no rentals just straight incomes

[@knockoutlightz]

Play to your strengths. Some people go 100% into real estate and are amazing at it. Some people have good discipline/risk tolerance and can weather the lows to reach crazy amounts in the trades market. Just be honest with yourself…

[@VanillaCherryBread]

How so? I’ve indulged in trading for months now and it’s really quite complex and overwhelming, I’m currently in the red!

[@Couchlnvestor]

While I’m learning myself, I invest using aid from a pro trader Kevin S. Mikan’. His methods secures me ROIs in the markets.

[@Couchlnvestor]

Last week, I went ahead and used my entire Roth $20K to run the wheel on SOXL and TQQQ. Currently down around 30% overall but I've also made >$10k in premium and over $50k in forex. So as long as the market recovers even halfway, I'm good.

[@SpriteMcBain]

@@Couchlnvestor That’s interesting, I hear a lot about these professional traders. Anyway I could get more details? How do you get to him?

[@ryangi5]

HE'S BACK, WITCHES!!! I know he's not feeling 100% yet, but I REALLY am pulling for him and hope that he gets there soon.

[@theinvestinghouse]

Glad to see you are doing good enough to make videos teaching again. I’m hoping that you get better and hopefully find some good solutions! Most of us here really do care about you and wish you well!

[@WheresObama]

Started trading the wheel strat a couple of weeks ago using your old vids as guidance - needless to say this vid is appreciated 😎 We’re all in your corner brotha, love ya!

[@stankymcdank7451]

Good to see you back to trading content!

[@calebpeacock]

Thanks for the hard work brother! I know you're going through a lot and it means a lot you took the time and energy to spread the knowledge 🙏 Appreciate you!

[@VD_the_GodKing]

Glad to see your back!!! Hope your feeling better brotha!

[@Financial_Awareness]

The separate iPhone for audio was so clutch. Great value in this one and love to see another vid, Adam!

[@slicktype001]

My man’s is back 🔥🔥🔥🔥. Glad to see your situation is improving!!! 🙌🙌🙌

[@claure11]

One of best financial KZbinrs in my humble opinion. All the best with your health and many thanks!

[@xkwantified]

Glad to see you are back👍!!

[@AaronParkerFTW]

Much love to you, man. I appreciate that you still manage to sound this smart after your brain being so thoroughly barbecued. Keep the videos coming 👍

[@MindMathMoney]

Good to see you bro I wish you a full recovery soon 💞

[@chasevonnable]

There you go Adam Hope All Is Well🎱🐐

[@vince1376]

As I see this video pop up on me feed, I'm updating and making personal changes to the sheets wheel doc you shared with us. I thank you again for all you've done with your content, hope you're doing well, and enjoy seeing you pop into the thetagang reddit comments from time to time 😉

[@robel8961]

So glad you are back at making these Adam! hope you and your bro are finally starting to feel better. Looking forward to more content form you!

[@saadatkhanbhatti2107]

The master returns, superb video. So much condensed, easily digestible information

[@mntccd]

This is good shit. Great to have you back 🤛🏼

[@marcushanlin]

Mad respect. Sometimes you just have to push through.

[@qwerty70403]

Glad to see you up and moving man.

[@x2dab184]

I like the bits about how to pay less taxes. maybe a whole video on ways to play less taxes, legally (or not). Glad you're making content again.

[@elitecpudoc329]

Commenting for the algorithm, but glad to see you back on the many channel doing work!!

[@moonshot2738]

Great to see you back posting on trading again. Great advice as always 🙌

[@aileen1553]

Great video. That excel tracker is SOOOO helpful, i really needed it. Was confused if i was making a profit or not with the wheel strategy bc i didn't know my cost basis but now i can keep track with your excel sheet. Thank you!

[@pawapuroyakyu13]

Glad to see you back Adam. Always sharing such valuable knowledge. Hope you're feeling better!

[@jakewagner9028]

First of all, thank you so much for the quality content and the resources. I've been using your spreadsheet and found a slight 'bug' the first time I was assigned shares from my CSP. The formula works great if you are only trading 1 contract / assigned 100 shares. However when I was assigned from 8 contracts, the "Try to sell calls above" field was way off, because it needs to be divided by 8. Just thought I might drop this hint for anyone else using the sheet. You can use a LOOKUP in excel or the INDEX method in Google Sheets to quickly grab the bottom most term in your "# of shares" column in your debit section, divide it by 100, and then divide the "try to sell calls above" field by it. Formula could look like this: =ABS(P1/100) / (INDEX(J:J,MATCH(143^143,J:J))/100)

[@joshjardim]

22 hours ago!? A new video!? Hell yeah!!

[@Logan-19]

Hey Adam, love that you’re making content again, bro.

[@ryel8427]

Just happy to see you doing well enough to upload, wishing you continued recovery!

[@blackhairedmongoose]

Glad to see another great video from you, Adam! Your wheel strategy videos have always been my favorite and I've been rewatching them for a while now. Good to see you're doing better!

[@randydiver3076]

Glad to see ya again Adam, Love ya ❤ Thanks for the video!

[@FernandoSouza-eh4hn]

Hey Adam. Really glad to see you back Man!

[@alimurtaza299]

SO nice to see you back ma man! Get well soon! Also any opinion on buying leaps during this downtrend!

[@InTheMoneyAdam]

I would be VERY patient before implementing leaps right now. You definitely want to wait until the market has confidently switched trends, I would not buy LEAPs right now in hopes of timing the bottom. I would personally hang on to you premiums from the wheel and either 1) average down on existing positions, 2) Keep the money aside and bottom fish as the market falls further, or 3) wait until you're confident the market sentiment has shifted, inflation is under control, rate hikes have been slowed or halted, and the aftermath has played out, then buy LEAPs. My opinion anyway.

[@iaintoft7003]

Good to see you making great vids, hope your health is trending in the right direction 🙏

[@passivedividendsoptions]

I like more downside protection so sometimes sell below my original cost basis but with the premium will be above my overall basis. Example: buy 100 shares at 162.10, would sell the 162 for more downside protection.

[@_OptionsTrading]

Glad you back, hope you continue to get better.

[@BlankB5]

This is so over my head. Idk what the hell you're saying, but I love to hear you saying it. Glad you're back making vids man. Hope you're feeling at least a little better.

[@lcity7409]

So happy to see your face and hear your voice! Sound advice as always! God Bless You and Your Family!

[@jimmyyu2184]

So good to see this vid, and so good to see you posting on reddit. Get well, take your time, we're all behind ya & your brother. Peace. 👍🖖

[@codingchallenges]

With the Wheel, lots of people have no money management in place and completely dismiss any unrealized loss and end up bagholding multiple positions for months, even years. (Including some well-known Wheel "pros"). And to make things worse, people get overleveraged by selling naked puts and then it takes one bad Friday to get assigned on multiple falling knife positions at once. From there, it's a small step to margin calls and accounts filled with stocks that you can do nothing with (other then start selling calls well below your cost basis). So yes, Wheel is great. Just know the risks and understand that "I hope the stock recovers" is not a strategy.

[@stan7757]

Exactly, and I find this strategy doesn't work well in a bear market such as now.

[@markburton9614]

@@stan7757 wheel works perfect in any market. It's harder to get the shares called away in a downtrending market so you can sell closer to or at the money for more premium. Just follow the golden rule of the wheel and only use stocks you believe in.

[@GuideGame1]

That's why it's better to only wheel stocks you want to own anyway AND that give out dividends so you can use them as dividend stocks

[@richardbeater8915]

Glad you’re back mang

[@Cnissha]

I am glad to see you and your content again.

[@MindTapt]

glad to see you're back

[@FriskyDingo1983]

Glad to see you're doing better, Adam. Do you sell calls against your put position as well? I know strangles are risky, but I find that they can get you to break even much quicker. I also enjoy doing covered strangles.... especially during these volatile times.

[@Dee--]

Wow! Glad to see you’re uploading again! Hopefully that means you’re feeling much better we love to see it

[@drdrews64]

Nice video. I do the wheel strategy because of your videos. It is more challenging in a down market. I continue to sell puts as well as calls on stocks I’ve been assigned to bring in more gains and track on the same wheel spreadsheet. Take care. Keep moving forward and getting better.

[@ohkee]

this is literally the video i hoped for. u r awesome.

[@yacinzawam3552]

Glad you are back 😊

[@Shaunster1995]

Ayeee hes back!! So good to see a good guy back up again! Get ready for this heavy market downfall Im loaded on long put spreads!

[@compounding_gains]

Great to see you back and doing better!

[@CyberSerene]

Helpful. Don’t push yourself too hard ❤ good to see you back tho

[@chrisberry9220]

Dude! Glad to seeing you making content again! I hope you continue your path of recovery

[@financialfredmgmt]

One day at a time brother, thank you for all you've done for this community 🤝🏾🙏🏾 prayers for you and your brother

[@sumith007]

Nice to see you back Bro...Get well soon!!

[@ryanbickel8488]

Looking and sounding better, keep up the hard work!

[@zackf3688]

One other: its useful to have an underlying that has lots of strikes and expirations.

[@AnonYmous-us2lh]

Thanks for the video and the very valuable pointers!

[@shamzjones]

Wish you the best man! Learned so much from you. Hope your health reaches 125%! Back and better than ever

[@dadswithpurpose]

Well done. Appreciate your videos new and old. Hope you and your brothers health gets better.

[@taxn]

Caught you on Reddit the other day under the options thread. So glad to see another video man. Hope you’re doing well and continue to get better!

[@alainleistikow4800]

It is so great to see you back making videos. I hope your health is getting better.

[@HighLifeWorkout]

Great video

[@victor4091]

good to see you here lol

[@jonnt]

Glad you’re back!

[@inhalstore3778]

Great to see you, Adam!

[@bluest1524]

This is great Adam, thank you. You look excellent! I assumed it was an older video. Newb question please: Can't I just sell cash secured puts and collect the premium, without intending to get exercised? Then, if I do, write covered calls on them anyway? I guess you're talking about a more complete revolution of the wheel. You explained it well, but is it still profitable to just sell cash secured puts and write calls if exercised?

[@Castellanos334]

Glad to see you making vids again, hope you and your brother are doing better.

[@robwinter3183]

Trade in Roth / Traditional IRA - - yes - great advice. I do it.

[@jordanstaab1303]

I am glad to see you are back on the stock talk. Good video!

[@kenkurtz8868]

Still new at this but a thought I've had is when selling a cc below even cost basis. When the price starts to come back, buy 100 shares before its hits the strike, then you make a small profit and keep your initial shares to keep selling additional calls. I haven't seen anyone ask this but it seems possible. I understand the risk that it could fall again but worst case you've lowered the overall cost by buying more shares at a lower price. Please let me know what I'm missing. Thanks and I'm so happy you are feeling better, at least enough to make videos.

[@X11CHASE]

Not a bad idea, assuming you have the cash to buy 100 more shares, and assuming your thesis on the shares hasn’t changed. As long as you truly don’t mind the underlying you’re trading you can’t go wrong

[@danweekliesorama9995]

glad to see you man!

[@auntypc4791]

So happy to say that I'm already implementing all three of your tips! btw, I promote your Wheel video everywhere I go and just suggested it yesterday to someone on Reddit in the CFVI sub. I gave them the fishing pole, it's up to them to use it. ;)

[@Notthelizard]

Awesome 👏 to see new content from you. Always so helpful.

[@josh7314]

omg! omg! he is back! let's go boys!

[@nicolaspiper3437]

Glad to see you back on the horse buddy 🐎

[@CharmelionZard]

Love your videos. At first your explanations were so intimidating and the learning curve was intense but after keeping with it I love your explanations above all other you tubers. I never set a strike price under my cost basis and I never adjust my cost basis. I just keep making money baby.

[@TraderChick]

Welcome back, I know you’re not 100%, but I hope each day brings you closer to being healthy and feeling better 🙏🏻

[@EtherealReality]

Congrats on the new video!

[@GarciaCapital]

Sending love from California!!

[@Taylorpenton]

Yesss. My boy is back

[@Veteran_Nerd]

THANKS for the video. Glad you're doing better, Adam! ❤

[@Nuo0IkiMilijono]

Hi, please can u make more videos about calculating profit and how to find options to trade?

[@fredrock_22]

Great video! Love the explanation!

[@cliffbarr1993]

I am so happy you look, and I hope you feel much better! How is your brother? Hope he is improving too...

[@Noahwxlr]

I stopped rolling CSP wheel positions at some point because the net credit is always significantly less and you lose the time invested in the position as well. I’ll just take assignment and ride it out with CCs. Even if the underlying drops. I’m fine with holding shares and maybe it becomes long term cap gains when I exit.

[@InTheMoneyAdam]

Very fair point. So that said, do you prefer ATM puts?

[@Noahwxlr]

@@InTheMoneyAdam I typically open for a .25 delta or slightly lower, but there have been times I sell ATM or ITM puts for a big discount on assignment.

[@deandre3055]

The Man...The Myth...THE LEGEND!!

[@lloydpereira182]

This guy knows his stuff

[@applegee9777]

Amazing explanation. You’re so awesome. Another great teaching ❤

[@Godzillakilla52]

You’re the man. Get well soon Adam. LONG IVIG

[@adswar]

The man is back! GME 🚀🚀🚀To the 🌚!

[@GS_STRATEGIES]

Can a person not in a mark to market account roll their PUTS or is that technically a wash sale?

[@topgunkilla2]

Didn't start buying LEAPS until I watched your videos. Must say I've been doing pretty good.

[@cjmcgowan229]

Yooooo welcome back 💪

[@merchantmareed]

Correct me if I'm wrong but it's not a choice between taxable account and Roth. If you make over the Roth income limit, you should be contributing to a TRADITIONAL IRA. There is no income limit but if you make above certain incomes the contributions will not be tax deductible. Same as a taxable account. It is still a tax shelter though because you don't pay capital gains tax inside the account yearly and you get to invest the tax you would otherwise pay on that contribution this year and let it grow until retirement, then you pay income tax on it. If you are young and a high learner it's a no brainer