Trading The Wheel Options Strategy - 3 Reasons Why You’d Lose Money With This Strategy

[@rockwelltradingservices]

How is your trading plan going? Let me know how you're doing in the comments below. Recommended Links & Videos: Trading with Margin: kzbin.info/www/bejne/i3ncaWeJhKyfars&feature=emb_logo Options Trading 101: bit.ly/2V7Nf9T The Options Wheel Strategy: kzbin.info/aero/PLBa3sAx-Io2nosgosERUhIZwzvIgD-3Vq The PowerX Strategy Playlist: kzbin.info/aero/PLBa3sAx-Io2l9ZV4s66J-uNkG6AJvhSPB

[@jasonmurray4714]

Watching this I had a lightbulb go off. That the stock you are assigned just happens to be a way your buying power manifests. Rather than cash (which you use to sell PUts) you have a stock (which you use to sell CALLs). I had always interpreted “stock you like to own” as a value stock (since that’s what I like to own). Now I see that it can also mean a stock that others would like to own so they won’t just fade forever.

[@rockwelltradingservices]

Awesome! Thank you for watching! :)

[@BessieBlazejewski]

You're absolutely right. I use the Cash Secured Puts so I can own the shares for a lower price. This is my favorite strategy.

[@markbloyd9852]

I was watching your videos a couple of years ago and learned so much. But I got out of trading because of time constraints. Now I'm looking into it again, and have been learning a lot from others, but they don't always make things as clear, nor do they usually share the down sides. For this I am so glad I came across your videos again. Thank you.

[@rockwelltradingservices]

Hi there! I'm Cristy, Markus Heioetter's assistant. Markus has a new audiobook out! It teaches you how to make more money through smart trading and investing. Want one?

[@mwu0088]

I'm 9 months late, but thank you for your videos. Very straightforward with no frills attached. Easy to understand the concept!

[@rockwelltradingservices]

😊 You are welcome! I am glad that this helps!

[@dc-wp8oc]

Like the pace and the insights Markus offers. Many presenters will show you the mechanics of trading, but few will step you through the why, that is, the reasoning of detailed trading actions. Fewer still will reveal their personal accounts with all the good, the bad and the ugly.

[@raymundpoh]

Thanks for this Markus, sad that I just came upon your videos only now. If I had seen this earlier it would have help me avoid my current 60k unrealised lost. This has wiped out my options premium of 15k profit for 3.5months.

[@rockwelltradingservices]

I am sorry to hear that. At Rockwell Trading, we believe that we earn more when we learn more. By the way, this is Cristy, Markus’s page admin. He has a new audiobook teaching people how to make generational wealth by trading and investing smartly. Would you like a copy?

[@BigVern-n1c]

Just fantastic. Simple strategy on good stocks. This is absolutely brilliant. Thank you 🙏🏼

[@rockwelltradingservices]

Thank you for watching!

[@otlorilori667]

I started trading this strategy before I even realized there was a name for it! Thank you for sharing your knowledge. ❤😊

[@rockwelltradingservices]

You are welcome! ;)

[@themrfabio2459]

While ride did not go as planned, I personally believe it’s one of the most valuable aspects of your KZbin channel. It shows the reality of trading and that it can quite literally happen to anyone if they get loose with their strategy.

[@rockwelltradingservices]

Well said and very true!

[@sjonesjax3684]

I really like your videos. Thank you for going over everything so simply.

[@rockwelltradingservices]

Awesome! Thank you for watching! :)

[@marshgray]

Loved it. Im following this strategy in Indian market and it works perfectly fine there as well. Currently im in trouble where I might need to take delivery of a stock called HDFC Bank. But after this video I wont panic and will do more call selling of next expiry. Cheers!

[@rockwelltradingservices]

Awesome! Thank you for watching! :)

[@singh2189]

I like that you are sharing your account. Good or not so good positions No sugar coating. Tough love thanks.

[@rockwelltradingservices]

😊 You are welcome! I am glad that this helps!

[@luismanuelmendoza789]

I remember when I saw the start of the strategy and also tought that you where overly conservative... now I see! In Tuesday I had to close some of my positions to maintain the margin and had to close at a lose, almost 25% of my already small account was wiped out 😅😅, this time i let some room and thankfully fared better. I like the way you put even your loses! A lot of traders only put their wining trades and kind of want to make it look easy, almost like a scam! Thanks 🙏

[@rockwelltradingservices]

You are welcome! I am glad that this helps! :)

[@drews734]

I really like how you walk through the situations and what to do. I’m learning a lot from your videos. Thanks.

[@carpdog42]

I would second this. I have watched a number of his videos now, and while he is definitely a salesman and does lay the pitch on a bit thick at times; He has really explained a lot of important things, talked through a number of situations, and I have yet to catch him BSing the details or trying to sell people on acting like maniacs. That "dropped my crystal ball" comment had me rolling; I wish more people in his position would leave their crystal balls at home.

[@rockwelltradingservices]

You are welcome! I am glad that this helps! :)

[@HawkIjr]

Sorry to see the drawdowns, but I really appreciate the transparency you are sharing with us.

[@rockwelltradingservices]

You are welcome! I am glad that this helps! :)

[@johndennis7752]

Hey Markus! Great video --- I got assigned on ALL 5 of my positions this week! I am the happy owner of shares in GDXJ, AAPL, AMD, NIO, and RIDE. Monday should be exciting :-)

[@simonmasters3295]

...and what happened?

[@johndennis7752]

@simonmasters3295 this was several years ago when I was very new at trading. The first 4 positions closed successfully and RIDE was the group's nightmare. I closed RIDE when it dropped to 12 for about a $6500 loss. Lesson learned, I no longer trade companies with no revenue

[@InvestorAcademyPodca]

Well, he isn’t the happy owner of RIDE.

[@johndennis7752]

@@InvestorAcademyPodca this was a long time ago. I ended up closing that trade near $11 for a $6k loss. Good learning experience in my first year trading

[@jackieciamarro2690]

Great video. Thank you for your transparency.

[@rockwelltradingservices]

😊 You are welcome! I am glad that this helps!

[@rlg222]

I've done this a few times last years and a little this years so far. Mostly penny stocks and not mid to large cap stocks. I hold them no matter what....

[@oudishaked1828]

Hi Markus, missed the live show today, watching the recording now. Made money with the wheel this week despite the last 2 days. Thank you for teaching us NOT to panic and to follow the plan, I too love to get assigned. Love the wheel! 👍 have a great weekend :)

[@rockwelltradingservices]

Awesome! Thank you for watching! :) I am glad that you are doing well.

[@Joeltraylorart]

I'm learning so much from your videos and books. It's a little overwhelming at first but so worth it. Thanks for sharing your knowledge and experience!

[@rockwelltradingservices]

😊 You are welcome! I am glad that my books and videos help.

[@Harrop58]

My aunt passed and I inherited some of her portfolio and cash savings, I’m 28 with about 400k cash in savings and as usual everybody’s preaching invest, so what stocks are a good long term buy, only major purchase I intend to make is buying a home in 5years from my returns

[@rockwelltradingservices]

Keep learning first. You can listen to my audiobook here loom.ly/BV2QgYY

[@SallyW414]

Vivian Jean Wilhelm is her name. She is regarded as a genius in her area and works for Empower Financial Services

[@Harrop58]

Thanks for the advice. The search for your coach was simple. I investigated her well before using her services.

[@RodSerling-y6p]

Yeah…..Listen to Warren Buffet.

[@RodSerling-y6p]

@@SallyW414. Sure she’s a genius at marketing on KZbin. I heard that. 🤪

[@tsleong1]

I'm a little confused about why you were assigned AAPL shares and were "unable" to sell premium against it, why not just sell above the assignment price, regardless of the amount you would collect? Isn't collecting $100 better than nothing? If it does go up you can roll another week to collect more premium which would give you a more respectable gain, if it doesn't go up to the sold strike you keep the $100. If it keeps falling another 7% you still collected more money? I would think the only premium which is not worth collecting is if the commissions would be more than the amount collected.

[@RolfOptions]

I am of the same opinion

[@undedmunky]

I think it's better to wait for it to get closer or at least have a rapid move upwards to collect more premium, when he'd roll he would have to keep moving it out farther or higher and could even have to pay a debit of he wants to stay too close to the strike he chose for a premium that's not worth it

[@grltrader]

I just found you - I’m going to test the wheel strategy on Monday using PLTR - just 1 contract. By the shares and then sell a covered call as long as the market looks like it might try to pop. I like and subbed and will be following your channel. Thanks for the great, detailed content .

[@rockwelltradingservices]

Awesome! Please reach out to [e-mail] if you need assistance.

[@richardthorne2804]

You have been such a blessing to my trading. I love the wheel; my plan isn’t as aggressive as far as ROI so I’m selling way out of the money puts but I’m still making a good monthly income. I have not yet been assigned but I know will likely make way more when I do get assigned. Thanks so much.

[@randallewebb]

That is really great. I am curious just how far OTM you are going? To me that is the benefit with options....you can take on as much risk as you want. That way you are balanced and can always stay calm. Also it is important to invest a certain size of your portfolio and have enough cash available for assignment.

[@rockwelltradingservices]

Hi Richard Thorne, thanks for watching. And thanks for your feedback. Much appreciated. "See you" in the next video 👍

[@ranjanarora2769]

Great video Markus, you have just calmed my nerves, was definitely panicking, going to work on my plans. Thank you!

[@rockwelltradingservices]

You are welcome! I am glad that this helps! :)

[@tonysierravista2280]

I am learning and appreciated the explaination.

[@rockwelltradingservices]

Awesome! Thank you for watching! ;)

[@kinlee823]

Agreed. Please advise your updates on these stocks and why you didn’t roll positions.

[@soulure]

Me watching this while ride is at $12 strike. I am so feeling your pain right now.

[@cryptoenthusiast4999]

It closed at $8.92 today.

[@soulure]

@@cryptoenthusiast4999 lol ouch

[@gregbabin365]

Very helpful video! I am in very similar position, just different stocks and much smaller scale.

[@rockwelltradingservices]

Awesome! Thank you for watching! :)

[@alleneverhart4141]

So, instead of rolling the option on Friday afternoon, Markus prefers riding "bareback" over the weekend - smoking the hopium of price improvement in the underlying on Monday ... or Tuesday ... or whatever. At some point, if the price does not come back you gotta close the position for a big loss or write that option that "locks-in" a loss, just to lower your cost basis. This is the tricky/art of the wheel trade Markus ain't tawkin-bow cuz he wants to blow sunshine up your xxx.

[@johnp7739]

What gets me are all these really young guys who started KZbin channels last summer doing the Wheel and other option-selling strategies. They don't even have a track record during last March when the market tanked. They seem to think the market can only go up and selling premium is free money.

[@richardthorne2804]

@@johnp7739 there is risk in the stock market. And yes you can stress anything to the point that it’s impossible to recover. But that’s highly unlikely. The market has always recovered after every correction and bear market particularly quality companies. If you have fear stay out of stocks b/c you will panic and make poor decisions.

[@thomasd5488]

@allen everhart "At some point, if the price does not come back you gotta close the position for a big loss or write that option that "locks-in" a loss, just to lower your cost basis." Rule #1) NEVER close a position for a loss. That includes, NEVER sell a cc with a strike BELOW your cost basis. Obviously you missed his video showing how he ended up with a profit even after TQQQ tanked. It was EXATLY the tricky/art of the wheel trade he showed us. Jealousy is wanting what someone else has. Envy is not wanting someone to have something, if you can't have it too. I'm guessing you are both. You are jealous and envious of his success, as a trader, and a teacher. Sour grapes, man.

[@alleneverhart4141]

@@johnp7739 Sorry for the harsh words but I think maybe people needed an injection of some trading reality. Sometimes stocks go down and they don't come back. And if they do come back it could be years before they recover. A perfect example is GE, my personal wheel waterloo. I started a wheel trade on GE when it was trading in the $40 range. As GE's price fell, I took assignment on my shorted-puts and rolled call options on GE stock down to $20. Then, the roll premiums I was getting at $20 would have taken some 3 or 4 years to break even on the +$20 loss on the shares. Eventually I wised up, took the loss and found a better wheel opportunity. Given that GE went down into single digits and has barely recovered into the "tweener" price range, I consider taking that loss at $20 to be one of my better trading decisions.

[@cramsa]

@@alleneverhart4141 exactly... my parents had GE Corporate bonds that blew up on them... “lucky” they only lost 80% when they dumped them... some fools stayed on the sinking ship and lost everything. Markus gave some VERY BAD ADVICE about holding a losing position forever.

[@Zerocostcylindur]

.. fantastic.. this is very educational channel. I love your personality sir and ty.

[@rockwelltradingservices]

Awesome! Thank you for watching! :)

[@aironwhite6533]

Very nice video. I always like to look at how things can screw up and what you can do about it to help the trade in your favor.

[@rockwelltradingservices]

Thank you, Airon! ;)

[@rpeter46]

this is VERY helpful! Thank you, Markus!

[@rockwelltradingservices]

You are welcome! :) Care to share how this video has helped you in your trading?

[@Ernesto.Castellanos]

Yes breaking it down is very helpful. Keep up the great work!

[@rockwelltradingservices]

Awesome! Thank you for watching and for your kind feedback. ;)

[@mdjournalstoday]

This guy is high all the time. Love it

[@rockwelltradingservices]

Lol! Thank you!😉

[@ArtificialNightmares]

So lucky to have found your channel this week.

[@rockwelltradingservices]

Awesome! Thank you for watching! :)

[@useemehere2]

What a great explanation, just don't panic because it is normal for the market to go up and down. This month you lose next two month your even and next following you are a winner again as long you don't sell and will keep holding your Stock. You will get panic only if War happened.

[@rockwelltradingservices]

Awesome! Thank you for watching! :)

[@christophermatthews4896]

love the energy!

[@rockwelltradingservices]

Thank you! :)

[@23johnnyy23]

Awesome video AGAIN! Markus...ty you for your openness, positivity and explaining situations. BRAVO! STOLAT! your friend JOHN S.

[@rockwelltradingservices]

You are welcome! I am glad that this helps! :)

[@desiexpat7]

doing options on AMD and Aapl now after 3 years....@202 and 165 strikes.....validates your point...good stocks go up significantly...just buy them if you get assigned and keep doing covered calls. What fo you think of etfs like SOXL to do options with including covered calls?

[@RolfOptions]

SOXL pays much more premium. That is my number one stock to sell a wheel on.

[@chocotv3573]

I like this strategy you just leave your trade until expiration it's so simple. Unlike other option channel they are discussing IV rank, standard deviation, broken butterfly, and so on and on... is so difficult to follow complicated graphs.

[@rockwelltradingservices]

Awesome! :) Thank you for your feefback.

[@mithundas1439]

if we enter a bear market, would the wheel strategy work?

[@sunyun4425]

@@ChristmasLights2 keep buying more of the same contract of it starts to lose money?

[@natusfreedom472]

Find a stock that has an up tend , so T.A is a guide Don’t sell options on down trend stocks ,

[@maurizioraspa1041]

sell calls without shares, buy protection instead. You could loose, but if its really a bearmarket it should work most of the time. Choose higher strike to give you space.

[@SuperDave328]

This strategy is working well for me! Thank you Markus!!!

[@rockwelltradingservices]

You are welcome! I am glad that this helps! :)

[@biqingtan4926]

Hi Markus, this video is so helpful. Thank you.

[@rockwelltradingservices]

😊 You are welcome! I am glad that this helps!

[@scotthenderson4376]

I'm very late to the party but am looking forward to doing this with those types of stocks but for now I'm stuck with cheap stuff to make the cash for the big boys. All in time.

[@rockwelltradingservices]

Awesome! All the best.

[@sks1570]

Thank you Markus. I learned about the mistakes I am doing in wheel strategy👍🙏

[@rockwelltradingservices]

You are welcome! I am glad that this helps! :)

[@RolfOptions]

Excellent explanation on various scenarios Markus. Question: why wouldn’t you sell Apple call below your cost basis? Lets assume you sell 100 strike, collect much higher premium, then there are two scenarios: price keeps dropping you collect that premium and reduce cost basis or price increases and you just roll out and up for a credit and still reduce cost basis. I think it is better than just waiting for a bounce. What do you think.

[@lukshmebain5714]

This video is very helpful and please make more like this

[@rockwelltradingservices]

Awesome! Thank you for watching! :)

[@jwrbike]

Why not sell the AAPL calls for small premium? Get paid a little to wait a week and try again. Or are you hoping for more premium early next week. Thanks

[@billhunt6562]

This is my question also. Why not sell AAPL cc at .30 Delta (or whatever; maybe go to .20 Delta for a position "underwater") to optimize income of that position at this time? If it gets called away, fine, sell CSP again next week. Sitting on the stock seems to expose you to more downside if we are headed into a bigger correction.

[@alleneverhart4141]

Markus made a judgement call here. He believes that AAPL will recover sufficiently for the next-Friday 133 calls to be worth something. IMHO, that is smoking a bowl of hopium. I think he should have rolled his 133 calls to the 128 strike, a delta of .24, where he would have collected $1.13 per share and have less than a 50% probability of touch. There is no reason why AAPL couldn't decline more. It has a +30 PE and pays a paltry .67% yield - why do you think Uncle Warrants is lightening his AAPL cart!? At the current dividend payout AAPL would have to go down to $41 to have a 2% yield - comparable to the other DOW and S&P stocks. This idea of avoiding "locking-in" a loss by selling a call below your assignment price is bogus. If he sold the 128 calls and they got called away - he would have recovered some $8 or $9 of a $13 loss and could turn around and sell puts again - and maybe AAPL would pay him back ... maybe.

[@dukeofearlyretirement]

@@alleneverhart4141 Yes, I wonder about selling calls underwater too. Perhaps selling underwater weekly calls and if the share price starts popping back up within striking distance, roll up and out... a cat and mouse strategy. Or would the mouse just get eaten? I might take that chance.

[@alleneverhart4141]

@@dukeofearlyretirement Yes. Markus collected a premium for selling a 133 put and another for selling a 133 call that expired worthless. His cost basis is around 131. So, it appears that the Markus strategy is to never book a trade that is a loss through the assignment mechanism. It's a bit specious but it kind-of works in terms of capital gains. If your'e in an retirement account where capital gains aren't really a concern then it's a different game.

[@RodSerling-y6p]

​@@dukeofearlyretirementmouse gets eaten

[@captainkrunch6372]

I was gonna get assigned 1k shares of NKLA on Friday but I closed position, however I didn't want any open positions this week because of Q2 data thus week, possible recession. That was my plan.

[@sunyun4425]

In your first example with AMD GDX DBX RIDE AAPL, the cost to cover all those contracts would be close to 400k, are you playing with cash or using margin? How much margin? Can you cover how to use margin with options?

[@rockwelltradingservices]

Yes, I use MARGIN, and I'm using the "standard" 2:1 margin for all my calculations, even though I have portfolio margin, which is 5:1.

[@APluralTon]

I feel like im hearing Owen Wilson, and i love it

[@rockwelltradingservices]

Awesome! Thank you for watching! :)

[@captainkrunch6372]

Excellent video, TYVM.

[@rockwelltradingservices]

You are welcome! :)

[@cabindude7656]

Thanks, very beneficial! 👍

[@rockwelltradingservices]

You are welcome. How are you trading so far?

[@sfx1971]

Hi Markus. I love all of your videos but this is one of my favourites. Thanks for the great advice!

[@rockwelltradingservices]

You are welcome! I am glad that this helps! :)

[@Hamlrts3rpic]

yay I was the 300th like! small wins... big gains! Ordered your book 📙

[@rockwelltradingservices]

Awesome! Thank you for watching! :)

[@justchilling_.]

Thanks for the lesson.

[@rockwelltradingservices]

You are most welcome!

[@rlg222]

Keep doing this Sir! I like it!

[@rockwelltradingservices]

Awesome! Thank you for watching! :)

[@wesguild7804]

Thanks for the video Markus, I'm stuck in a trade with WMT at the moment... Your AAPL trade is similar

[@rockwelltradingservices]

You are welcome! I am glad that this helps! :)

[@RodStar1]

That ride trade question aged well 😂😂... Would u want to keep RIDE premium or sell the 4700 shares and lose 8k ... We now know the answer 😂.. on a side note ur channel helped me a lot

[@chrisdove1659]

yes

[@joshuaphillips49]

Why not just close your position immediately at the same value as soon as it assigned if we are only keen to collect premiums anyways? personally id rather the safe money than worrying i could miss a run up on a call once the shares have been assigned

[@michaelhernandez4932]

Why didn’t you buy to close the puts and roll them out farther out in expiration?

[@financeabcs]

That would have been my preference!! Just roll the put forward and offset the loss to cover the put with the premium of the next put you sold!! That gives you more time for the underlying to move in your favor!! 😊

[@eggzy53]

Hey! Markus, you're a really useful person. I'm asking you to make more videos about Binary Options and their strategies. I hope you see this comment.

[@icefishing6592]

Ride is a bad choice. Good explanation

[@rockwelltradingservices]

Thank you for watching!

[@lawrence6075]

Great Video Markus !!

[@rockwelltradingservices]

Thank you! ;)

[@ticks2012]

Hi Markus, thanks for your videos. it’s definitely helpful for a beginner options trader like me and your step by step demos using a live account definitely makes it easier to follow. have u been a lecturer / teacher by any chance? as your videos are easy to follow and understood! thank you

[@rockwelltradingservices]

Hi Xi T. I am not really a teacher by profession but teaching is my passion. ;) I am glad that you find this helpful. ;)

[@kriswarrior9553]

awesome possums Markus...loved it

[@rockwelltradingservices]

Awesome! Thank you for watching! :)

[@SnRGlobalIndustries]

It reminds me of that classic song: Roll your trade roll, roll, roll your trade! Its a boat? who would roll a boat?

[@Elizabeth-tp5pt]

Very clear, thanks

[@rockwelltradingservices]

You are welcome! I am glad that this helps! :)

[@audricfafchamps9615]

"But we'll worry about this in just a moment" >> That's what I call keeping your head cold =D

[@SlackerPRO-Trader]

Markets with Markus!!

[@CarloRizzante]

The problem with the wheel is that it leads to getting assigned at strikes that can easily end up in the wrong order. In other words, one will easily end up buying the stock at higher strikes than when selling it, missing great buying opportunities in the process. There is some profit to be made at first, undoubtedly, but it is fairly modest with regards to the capital invested and the risk taken. If the wheel was that great strategy, then everyone would be doing it already. All that said, it's always interesting to see how others trade and how they think. I always learn something useful. Thanks for that.

[@happymouse442]

For most of people. holding SPY and selling occasional covered calls would beat more than 90% of active traders. For one thing, it’s real hard to beat index in the long run. Also after tax, buy hold is much better than active trading. And time spent on active trading is expensive too. If you have worked something else, you would have made a lot more money. I did trading more than 7 years profitably, seen many people, and got this conclusion. While I appreciate his sharing this info, it doesn’t need to be this complicated, not to mention risky for novice traders

[@722guy]

Why dont you close a position before it is assigned? It would save a whole lot of headache and time

[@bluesky5587]

@@722guy the whole point of the wheel strategy is to get assigned..it is a plus...to sell calls.

[@722guy]

@@bluesky5587 But then something like AAPL happens and now you have to wait and pray things turn around.

[@happymouse442]

@sam chump My point is, if you can just buy SPY and sell calls once a month or something then you don't need to waste time for your active trading underperforming index, not to mention you have to pay taxes on your short term gains (fi you have any).

[@bkco]

Hi Markus, do you look at the risk reward ratio (premium / buying power) or just look at the technical analysis?

[@iounothing4urtime]

Great video!

[@rockwelltradingservices]

Thank you for watching! ;)

[@RicardoHernandez-zr1pw]

But my stocks dipped too much and the selling of Calls provides very little premiums now. How do I fix this?

[@RicardoHernandez-zr1pw]

@sam chump ARKK and PLTR are my most recent bag holders. They keep going lower and lower.

[@bluesky5587]

This is the problem with the wheel ...we get into a down market which will happen for sure at some time ....and we all will be left holding stocks ..which is fine ...but all,premium income will cease ...... unless u sell calls at loss strikes to keep premium flowing ? Is that part of the wheel plan? Or is the plan to just sit it out and hold until recovery rolls around.

[@bluesky5587]

@sam chump hi Sam ... I must disagree .... look here with Apple ... markus is in a holding pattern ...and this is a small drop in market .... when or if we get a major correction ....and it is likely at some time ..... all stocks in a wheel will have to be held like apple here or sell calls and puts and get assigned with principal loss .... it will happen eventually ... so my take is make sure you sell options on stocks or better still etf like QQQ or SPY ... that you can happily hold for months or year and not sell massive premium on ...you could sell call way out of money and manage them so as to protect your shares .... plus do not be caught in margin as you will not have the luxury of waiting it out.

[@bluesky5587]

@sam chump thanks Sam ...I must check out UVXY...good to be prepared and have a plan like Markus suggests.

[@JRInTroy]

very helpful, thank you

[@rockwelltradingservices]

You are welcome! I am glad that this helps! :)

[@sunyun4425]

Markus, how much margin do you use when trading options?

[@financeabcs]

I don’t use more than 20% (notional amount of underlying compared to entire portfolio).

[@switchfire]

Hey Markus, thanks for all of your informative videos! Quick question.. how are you calculating the "minimum option premium" when it comes to selling calls?

[@sinmaan7568]

Very good video. Very useful. But how can you lose money on the wheel? Your trade were all pretty positive? Thanks for sharing the wisdom!

[@rockwelltradingservices]

😊 You are welcome! I am glad that this helps!

[@johto]

Haha, I'm currently down around 5k on one of my positions which i'm selling calls against, so i know the feeling Markus. Your expression after 12:40 was gold. Heheh. I'm not stressing, because, like you are saying, i'm not panic selling and i have a plan 👍

[@johnp7739]

Just curious, what's your plan if the market keeps tanking into a real bear market? What if it falls over 30% (like last March) but doesn't recover right away like it did last year?

[@johto]

@@johnp7739 If you are holding a quality stock and have free cash in the account, you would wait when it drops enough that selling covered calls don't give you enough premium, then start selling cash secured puts below the current price to get better premiums with the covered calls (basically a cash secured strangle). If it keeps dropping, you now got assigned more shares but at discount. Now your overall stock position price is lower, so you can continue to sell calls at lower strike to get better premiums. and hopefully get called away at your new break even. Does this make sense? 😎

[@johnp7739]

@@johto Yes. Just hope the stock doesn't turn out to be another Enron, though...if you're old enough to remember it.

[@johto]

@@johnp7739 Yep. Thats the rub 🤔

[@donrahmer]

So much doom and gloom! The stock market always goes up. Have a plan.

[@amyo1585]

You're awesome Markus! Question -- You say if AMD & DBX close above $83.50 and $21.50 respectively, you'll just collect premium. Got it. Are the expiration dates of the option chain the same - February 26? I guess what I'm wondering is - do you do this evaluation (as your describing) every day? Or just when you're positions are deeply in the red? Or just when they are nearing expiration? Thanks :D

[@masoudmokhtari8997]

Thanks Markus

[@rockwelltradingservices]

You are welcome! ;) What have you learned so far?

[@masoudmokhtari8997]

@@rockwelltradingservices a lottt. Wheel strategy, power x strategy, indicators, support & resistance, and keep going and learning with your amazing and unique teaching videos. Thanks for every minute you are spending for teaching

[@rockwelltradingservices]

Awesome! ;) I am glad to provide value!

[@DougNaden]

Good good good good good!

[@rockwelltradingservices]

Super good, good, good.

[@nathanmccullough7755]

What nobody ever seems to talk about is what you do if the underlying falls significantly beyond your strike. What if you sold a CSP at $135 and the underlying falls to $112 @ expiration? You won't get hardly any premium selling calls @ $135. Do you sit on the position until the stock rises closer to your assignment price? What if it keeps going down? What if this happens to most of your positions due to a significant market correction? Getting assigned slightly above the market price is typically no big deal but it's far more difficult to manage through if you you get assigned way above the market price. For this reason, knowing how to roll can be valuable. If you prefer not to roll to avoid assignment, selling CCs below your cost basis to generate better premium can also have value (but you may have to use rolling up and out as a strategy to avoid selling shares below your basis). I understand the sentiment of the video but it doesn't account for what might happen in a market that drops and then trades sideways or trends downward.

[@financeabcs]

You are describing the worse case scenario which is entirely possible. That is why I personally prefer to sell puts on the S&P 500 index (ETF). If there is a market correction then just roll forward the put. Eventually you are likely to do well. Ideally your loss on buying the losing put will be offset by the premium you get for selling the new puts…. 🙏

[@RosePigCooking]

When you sell puts do you use cash or margin?

[@aboveaveragedadgaming1258]

Any thoughts on selling covered strangles if you are assigned on you put option. Collect premium on both ends?

[@sethmatlock7424]

Markus, on the AAPL trade why not sell calls below 133 for this increased premium if they become in danger of being exercised roll up and out? Any reason you don’t do this?

[@financeabcs]

Not a bad idea. Just continue to collect premiums. Roll them forward!! 🙏

[@lisamontes-bradsher9752]

Sometimes…wait! Another Big character trait a trader needs is: Patience!

[@rockwelltradingservices]

I agree! 👏🏻

[@financeabcs]

Patience is very important. Most of the time successful investors have very little activity. 🙏

[@RodSerling-y6p]

The only thing that I would do differently is sell my cover call further out of the money. Perhaps at a 22 Delta… or one standard deviation. You will miss out on a lot of upside if you sell your strike at the same price that you were assigned the stock . Having unlimited downside but limited upside doesn’t resonate with me :-(. However, I would sell cover calls at the same price that I got assigned the stock if the stock was trending downward.

[@rockwelltradingservices]

Here is what our AI Rocky think what would Markus say : Markus Heitkoetter would likely agree with selling covered calls further out of the money, such as at a 22 Delta or one standard deviation, to capture more upside potential. Selling calls at the same price as the assignment could limit profit if the stock rallies. However, he might also emphasize that if the stock is trending downward, selling covered calls at the assignment price can be reasonable. This approach helps to collect premium while managing the position during a bearish trend. He would suggest adjusting your strike price based on the stock's trend to optimize profit potential while managing risk effectively. By the way, this is available in the PowerX Optimizer. Cool right?

[@billslaughter9518]

Do you have a preference Covered Call or Cash secured Put? What (if any) defensive actions would you take if it looked like you were being called away, more specifically if the stock shot up much higher and you were now (FOMO) missing out on those profits? Or does the wheel not care and banks the premium.

[@sethmatlock7424]

Roll up and out

[@financeabcs]

I prefer the cash secured puts!!

[@John.Mendes]

I do love your videos

[@sonnyn5119]

Hi, Does it make sense to buy to close once you reach your max profit, before expiration date, to avoid losses and getting assigned? Are there any pros and cons to do this? Thank you in advance!

[@rockwelltradingservices]

Great question. I did a video explaining this topic last weeK. Take a look and let me know what you think: kzbin.info/www/bejne/jWjUkJ96aqmLpMk Does this help?

[@jaelee56]

l am learning.

[@rockwelltradingservices]

Awesome! Thank you for watching! :)

[@dimkaboussy3126]

If you get assigned do you use the margin as you have to buy

[@rockwelltradingservices]

When you get assigned on an options contract, it means you are obligated to fulfill the terms of the contract, which could involve buying or selling the underlying asset. If you do not have the necessary cash in your account to cover the purchase of the underlying asset, you may need to use margin to complete the transaction. Margin allows you to borrow funds from your broker to cover the purchase, but it's important to be aware of the associated costs and risks, such as margin interest and potential margin calls. It's crucial to understand how margin works and manage your account prudently to avoid any adverse consequences.

[@What2expectinthehospital]

I like you investing mindset

[@rockwelltradingservices]

Thank you!

[@cryptopanda6641]

Yes! Markus.

[@rockwelltradingservices]

Awesome! Thank you for watching! :)

[@diddly7309]

is it beneficial to sell calls on apple whilst you wait for the price to recover?

[@rockwelltradingservices]

Yes, selling calls on Apple while waiting for the price to recover can be a good idea if you expect the stock to stay flat or recover slowly. By selling covered calls, you earn premium income, which helps while you hold the stock. Just remember, selling calls limits your upside. If Apple's price jumps above the strike price, you might have to sell your shares at that price and miss out on further gains. So, pick a strike price that aligns with how fast you think Apple will recover. If you expect a slow recovery, this can be a great strategy. If you expect a fast rebound, you may want to hold off.

[@scubasteve117]

Would love to join your live chat on Monday if it's still going.

[@rockwelltradingservices]

Hi Steve we have the webinar, you can register here loom.ly/nOOtotk