To The Moon

The Wheel Strategy makes the most of your time and is a favorite among many seasoned traders.

Whether the market is going up or down, this strategy lets you generate steady cash flow by continuously selling options.

If you want to give it a try, The Options Handbook sums up 4 key rules and potential risks for the Wheel Strategy!

▶ Recap: The Wheel Strategy

The core idea: sell puts to collect premium, buy the stock if assigned, then sell covered calls and repeat the cycle.

The previous post goes into the Wheel Strategy steps in detail. Feel free to check it out if you’re curious—we’ll keep it brief here.🙂

▶ 4 Rules to Help You Pick Stocks 🎯

Picking the right stocks is crucial if you want your wheel to keep spinning smoothly. Here's what to look for:

1. Moderate Volatility (Medium Beta)

   You want a stock that moves enough to offer juicy premiums, but not so much that you risk big losses. Too calm, and the premiums are tiny; too wild, and you might regret it.

2. Good Liquidity

   Choose stocks and options with plenty of buyers and sellers. This keeps your trading costs low and makes it easy to get in and out.

3. Long-Term Uptrend

   Since you might be holding these shares for a while, stick with companies with solid fundamentals and a track record of growth.

4. High Option Premium

   Stocks with higher implied volatility (IV) usually pay better premiums, making your put and call sales more rewarding.

▶ Risks to Watch Out For ⚠️

1. Market Risk

   If the stock drops sharply, selling puts could force you to buy shares at a high price, resulting in paper losses.

2. Opportunity Cost

   If the stock rallies strongly, selling covered calls might cap your upside, forcing you to sell at a lower price and miss out on bigger gains.

   Picking the right strike price is key to avoid limiting potential profits too early.

>> Redeem Options Handbook Now <<

>> Click here for the Simplified Chinese version <<

>> Options Camp 期權訓練營 <<