What is option Wheel Strategy?

The option wheel strategy combines selling options and owning stock in an attempt to maximize profit. Keep reading to learn more about the wheel strategy and how to become successful at trading options . How do you use a wheel strategy? The wheel strategy uses a combination of trades to collect premium.

Is the Wheel Strategy a low-risk method of trading?

All traders want to earn the highest returns possible on their investments, and many of them consider the wheel strategy as a low-risk method of trading. By “wheeling a stock,” or using the wheel strategy with a specific stock, you are placing a bet on the future of the company.

Which stocks can be used for the Wheel Strategy?

Cheap stocks that can be used for the wheel strategy include: Apple " (AAPL"), PayPal ("PYPL"), Blackstone ("BX"), Disney ("DIS"), Starbucks ("SBUX"), and JP Morgan ("JPM") - all of these stocks are trading below $200 as of January 17, 2023. Running the wheel strategy and trading indices or ETFs may be better due to reduced volatility.

What are the pros and cons of the Wheel Strategy?

What are the pros of the wheel strategy? The first benefit of the wheel strategy is that it is relatively low risk. It is low risk because you are selling an out of the money put option, so the stock would have to fall below its current market price.