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 profitable?

There are multiple possible outcomes when it comes to the wheel strategy. While the wheel strategy can be profitable, it is important to recognize the risks associated with selling OTM puts and getting assigned stock. One possible outcome it that you're assigned stock and the stock continues to fall.

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.

Can you run a Wheel Strategy on penny stocks?

In order to successfully execute the wheel strategy, you have to be able to trade stocks that are liquid and have an active options market. While some prefer the lower risk of penny stocks, you will likely not be able to run the wheel strategy on penny stocks because they may not have active options.