Do I have the jist of the wheel strategy?

Windlesham1 said:
You know there is extensive research into covered calls and it is the worst strategy- I'd buy a stock and tuck it away until it doubles. Trade options in their own right-that's what the indexes are for -and there is no CEO of an index who gets caught partying with Jeffrey Epstein
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What is reasoning for it being the worst strategy?
 
IronFist said:
Woudn't you lose money versus doing it the selling stock way?
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No, you paid $15 for the stock. You could sell the in the money call at $15 and still be profitable if the stock is above $15 at expiry. You would be profitable even below $15 as you have the proceeds of the call to subtract from $15.
 
ZBZB said:
No, you paid $15 for the stock. You could sell the in the money call at $15 and still be profitable if the stock is above $15 at expiry. You would be profitable even below $15 as you have the proceeds of the call to subtract from $15.
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Why is it at 15?
 
Yeah right cuz a 18 call for 3 gives you a total price of 15. I calculated that wrong when I wrote that. I was thinking 20 stock and 3 dollar option gives you an overall full of 17.
 
IronFist said:
What is reasoning for it being the worst strategy?
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Apparently the upside generally exceeds the premiums you take in for a covered call, even with a bunch of quants from UBS doing clever stuff over 10 years. Like most people, I started with covered calls and watched my protfolio plummet in 2000. The problem is finding stocks that don't tank- easy for the last decade from jan 2010- jan2020. However to avoid being called away you have to buy back your short call and roll -got that T shirt
 
When I do it I sell a put at an area where it is most likely to bounce and then sell a call higher to make money off the stock movement as well. I’m actually doing a free presentation about this on the optionstribe on March 23 if ani’s interested
 
Bekim said:
When I do it I sell a put at an area where it is most likely to bounce and then sell a call higher to make money off the stock movement as well.
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What if stock gets close to strike, but you don’t get assigned. Do you enter stock or sell another put? In other words, do you prefer to not be assigned even if you feel strongly that the stock may have a good bounce off the level?
 
Bekim said:
When I do it I sell a put at an area where it is most likely to bounce and then sell a call higher to make money off the stock movement as well. I’m actually doing a free presentation about this on the optionstribe on March 23 if ani’s interested
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What do you mean bounce?
 
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