What is the options Wheel Strategy?

The options wheel strategy is an income producing strategy involving selling put options, potentially owning stock, and selling covered calls until the shares are called away or the position is closed. The wheel is an increasingly popular strategy for investors that want to generate income before and possibly during stock ownership.

What are the best stocks for the Wheel Strategy?

The best stocks for the wheel strategy depends on an investors risk tolerance. We believe in sticking with blue chip companies and highly liquid ETF’s. Consumer staples stocks and stocks with a high dividend yield are also fairly low stress trades for the wheel.

What is the Wheel Strategy for AAPL shares?

When we use the Wheel Strategy, we know that the next step is to sell call options on these AAPL shares. So the question was about selling the call options for lower than $133. If you choose the $125 call strike price to sell, and it gets assigned, you’re out $8.00 per share.

How much did the Wheel Strategy lose in 2020?

By the end of the first half of 2020, the wheel strategy lost $845. However, it did a good job of recovering all of that loss from June 30 to December 31 — making a gain of $993 and resulting in an end-of-year P&L of $148. Owning long stock (just buy-and-hold) would give the largest return ($1016) in a bullish market.