8August 2020
Coffee With Markus | Episode 70
For an in-depth look at options basics, check out our Option 101 playlist here, https://www.youtube.com/watch?v=tXpBZGj-FiA&t=1s
https://www.rockwelltrading.com/wheel
Live Trading My $100k Tastyworks Account
Time Stamps
0:00 Introduction
1:55 Market Recap
6:05 Tesla Summary
7:35 Indices Recap
8:00 The Option Wheel Strategy Recap
21:00 Question and Answer
22:18 Featured Question – TSLA up 240%
27:58 Featured Question -Puts on SPX
33:40 Theta In Options
35:35 Featured Question – Naked Put?
41:28 Featured Question – Iron Condors?
46:06 Featured Question – Premium fluctuation?
46:30 Featured Question – Option Wheel good for IRA?
As always, before we discuss an advanced options strategy, we need to recap the basics.
For an in-depth look at options basics, check out our Option 101 playlist here, https://www.youtube.com/watch?v=tXpBZGj-FiA&t=1s
Buy A Call – Right to buy 100 shares of a stock at the strike price.
Sell A Call – Obligation to sell 100 shares of a stock at the strike price.
But A Put – Right to sell 100 shares of a stock at the strike price.
Sell A Put – Obligation to buy 100 shares of a stock at the strike price.
The Wheel Options Strategy
The “Wheel” Options Strategy is a more advanced strategy that uses a combination of calls and put options.
This strategy is like “getting paid while you wait to buy a stock”. This is also one of the strategies known to be used by Warren Buffett.
This strategy is used on a stock that you’re bullish on. It is used to profit on the downward movement of a stock, as the stock approaches your entry point.
The Options Wheel Summary
This is a powerful strategy that can deliver a 30% return per year, safely.
This is a systematic way to grow your account
You MUST pick stocks you want to hold long term.
One of the most fascinating features of selling options is that time is working on YOUR side. Using the options wheel strategy, I sold puts on Marriott and I received a premium for doing so. I’m benefitting from something called Theta. Theta is the time decay of options and it can work for you or against you depending on which side of the trade you’re on. Many traders use this strategy to earn thousands every month while waiting to buy the stocks they want to hold long term. If you want to learn more about theta in options, I designed a class that can teach even novice traders the ins and outs of the option “greeks”. Take your trading to the next level by incorporating these strategies.
Here’s a quick video I produced on theta https://www.youtube.com/watch?v=kSZWxk3qCZI
It’s important to remember that these types of strategies are optimal when market conditions are trending in a specific direction.
It should be noted that It’s possible that we’ll see a change in market direction or a possible reversal in the coming weeks.
If you’re interested in learning more about TastyWorks, check out https://www.rockwelltrading.com/tastyworks
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