Why I Hate The Wheel (And How I Trade It)

This is the one and only YT channel regarding market trading that is real. Never have liked the "wheel" for all the reasons you stated.

1:12 I mostly sell covered calls, occasionally cash secured puts, but I always treat the premium as a basis reduction. For me it doesn't have anything to do with which way the stock is moving, it's just easier for me to keep track of profit per share when I finally sell the stock. You're right, it's income, but most of my trading is in IRAs so it doesn't feel like income and I guess technically it isn't. I much prefer selling calls over puts. If I like a stock, which includes liking the premium on calls, I usually just buy it and sell a call soon after. I will sometimes sell very short term puts expiring the same week or maybe the week after, instead of buying the stock outright right away. I typically sell weekly calls too or at least short term, sometimes 2 or 3 weeks out. Rarely do I sell them more than a month or 6 weeks out. You mentioned liking the further out calls, but typically I can collect more premium in total by selling a weekly call 12-14 times than I would selling a call expiring three months out. Plus I'm not locked into a single strike price that whole time and can adjust the strike every week or two with the stock price. Thanks for the video.

I made ROI of 40-60% two years in row wheeling some stocks, then lost almost all of it riding few sour grapes down to shitters, even doubled some down by BUYING LEAPs, ugh! Lessons learned, wont touch any single stocks in the future, only broad indexes (and futures) 👍

Marcus Heitkotter was a guy selling the wheel strategy about 4 years ago when the market was going up, he stopped posting on his channel after 2022. Karl Domm subpoenaed for his trading records and it showed he only made 3% in 3 years and made 2 million selling courses on the wheel strategy.

while I appreciate this video, I am a bit surprised this was an opportunity to show how your portfolio of trades was impacted by an actual fairly large down day and VIX spike which we haven't had in a while and there is no update? Yes, I'm sure you covered it with people in the group but I generally appreciate your transparency so I was hopeful you would share when it isn't all "new all time highs" and profits and how you managed(or didn't adjust) with the volatility spike. Those are the real times to teach lessons I'd say. I do think it's a great channel was just hoping it would be talked about.

Thank you Tom. I am a big fan. Love the Income Navigator service. But, I do have to push back on a statement that you made in this video. You said that the only way that a person is happy getting assigned/owning the underlying stock/ETF/Future is "because the trade went against you." That is not true, at least not for me. You can pick the price that you want to get long and get paid to wait for assignment at your predetermined entry price. I've done it many times, and then I hold the stock or position from there, for years sometimes. When it gets near my exit price, I sell the covered call. I firmly believe that an investor or trader should have an exit strategy for any potential trade, before they enter it. That has worked very well for me, and I do believe that selling calls against long positions is a conservative way to increase returns and lower cost basis while waiting for your predetermined exit price. Once again, thank you for all that you have done and continue to do for so many people, me included. You are helping so many people get better. Awesome.

33:31 When MCD drops below 280, the 295 call will be worth less than 2.00, and you won't be able to sell for 5.00. Same on 35:45, when your CL gets assigned at 70, the 77 call may be worth less than 1.50.

Yeah the wheel can be tough especially with leverage. The 'Trade with Joseph' guy was down $150k on last year's 10% pullback. If we had crashed from there he could have wiped out his entire account. I prefer not to be assigned.

Great video! Looking forward to watching part 2!

At last, somebody saying what I've been thinking for at least 12 months.

So the wheel is dangerous but selling "naked" puts are not. The fact that one is covered and the other is naked shows the wheel is safer.

Great video as always 👏🏼👏🏼

Fantastic breakdown

For me it's a very distinct set between premium collection and basis reduction: Premium collection when I'm hyper-wheeling futures. I just want the premium and I want in and out as fast as possible. Using weekly ATM puts to start, getting out with weekly ATM calls to close. I don't worry about the actual points from the contracts (much) but more so the premium. Basis reduction is when I get some kind of quick run up or gap in my long-term portfolio I'll sell a far OTM call at for whichever ticker had the run-up. If it keeps running I get some gains, but mostly just want to get a small bit of cash back against my positive position. So not even a true "wheel" just the similar mechanics. I also make sure not to sell calls against tax lots with a <1 year holding period.

Very timely insight on ROKU!

BTW, Yield Max TSLY is doing a reverse split. Lol.

Great video 💪🏼

Thanks for the content and I appreciate the insights. At times it’s a little difficult to not get distracted by the hundreds of “ok’s”. Aside from those, I really appreciate the style as well. Hopefully you keep providing good videos. Thanks again.

For a longer term portfolio I like the collar. When you have 100 shares of stock at risk I like to have paid for protection

Thanks