How to Buy Low and Sell High in Today Market Using Options Wheel Strategy

[winstonwee]

First of all, it's not my theory, it would be an inevitable eventuality if you want to buy the stock via assignment from the short put, you WILL have to pay more that $45 to buy the stock unless of course you close the short before the expiration date assuming there is no early assignment. That's just how options work. And yes, we "sit duck" (and actually we are not sitting ducks; we are actually hunters sitting there waiting patiently) for the best price to come along and then pull the trigger to buy at our choice. We are not forced into taking a worse price when there is a better price sitting right there within our reach. When we pull our trigger to buy, we buy it at the best price, I told you MILLION times AT THAT MOMENT. Nobody knows the future price; nobody is good at reading tomorrow's data but tomorrow's data is irrelevant and is not needed. The bottom line is we always get the best price at any given moment whether it was yesterday or today while you either don't get the stock missing a profitable run or overpay for a stock and get a portion of the profit while hoping that the premiums will be able to compensate for not getting the best price.

haha AT THAT MOMENT
haha
haha
when is the moment I have traded 20 years and I never know the moment is when until when I look back at history and than I have the ah ha moment i should have use this number with my date of birth and all work out that is the price I should be buying last week
But the ah ha moment never come when I am trading live

 

[JSOP]

haha AT THAT MOMENT
haha
haha
when is the moment I have traded 20 years and I never know the moment is when until when I look back at history and than I have the ah ha moment i should have use this number with my date of birth and all work out that is the price I should be buying last week
But the ah ha moment never come when I am trading live

Yes that moment is very important. You seize it or you don't. If you don't see it live, then you are not going to see it using options either. Trying to get in on a stock through assignment is not the alternative; it's only a last resort. You really just wanted to write options for income but you got assigned due to an increase in IV and you didn't mind owning the stock as the last resort. It's not to get in on the stock because you couldn't or didn't know what should be a good price to get in on a stock at. Like I said right at the beginning, if your aim is to trade the stock, you should trade the stock and maybe use options to hedge or buy calls/puts directly if you want to save some cost but not through wheels.

 

[winstonwee]

Yes that moment is very important. You seize it or you don't. If you don't see it live, then you are not going to see it using options either. Trying to get in on a stock through assignment is not the alternative; it's only a last resort. You really just wanted to write options for income but you got assigned due to an increase in IV and you didn't mind owning the stock as the last resort. It's not to get in on the stock because you couldn't or didn't know what should be a good price to get in on a stock at. Like I said right at the beginning, if your aim is to trade the stock, you should trade the stock and maybe use options to hedge or buy calls/puts directly if you want to save some cost but not through wheels.

I have never wanted to trade stock in the first place
I sell put was not to get assigned, I sell put and hope that I was never assign but in the unfortunate event I am assign I want to sell call to get rid of it so I can go flat.

just curious on that moment let say I want to buy NIO at 45. What is the moment to say yes. is it 44 or 42.87 or 41.13. How do you define the moment? Sure looking at last week it is easy to see the moment. But when trading live how do we get the moment? Ok maybe I have ask too much you must have some magic formula that I do not have

 

[JSOP]

I have never wanted to trade stock in the first place
I sell put was not to get assigned, I sell put and hope that I was never assign but in the unfortunate event I am assign I want to sell call to get rid of it so I can go flat.

Ok if you just want to trade in options then, then there are other option strategies that are lot more efficient also depending on what you want to do.

just curious on that moment let say I want to buy NIO at 45. What is the moment to say yes. is it 44 or 42.87 or 41.13. How do you define the moment?

You don't. You don't care because that's irrelevant. You will never get the best price because nobody knows the future. You cannot be a perfectionist with trading. You can't always strive for the PERFECT price. You don't get the perfect price either with the option assignment either.
This is my 10th time stating this to you and you still don't get it. I am going to copy and paste next time when you raise the same point.

 

[ironchef]

And this is exactly why you need to have more than one well-tested strategy under your belt. I'm doing the wheel while it pays - but also digging like hell into strategies that will work in other market environments. It's not The One Holy Grail - just something that's been working very well for me and a number of others.



Unfortunately, there's an accepted dynamic here on ET of panning the hell out of anything positive - and given that consistent returns in trading are a rather fragile thing that takes effort, focus, and awareness of a lot of different factors, it's trivially easy to criticize and mock. On the one hand, there's a benefit to this: it makes it easy to identify (and block) jealous losers because they will always take that cheap shot. But on the other hand, it kills off any desire that people, especially newbies, have for sharing what they've discovered.

There's not much to be done about it - even the best-kept lawns will have a dog turd on them sooner or later - but it's a bit sad, since it damages the utility of this forum.

Been here since 2014 and had seen many posters posted similar strategy as OP. As always the pros among us told us to be very careful. You see most posters did not trade long enough to encounter problems that the pros warned against. Some may never see those problems ever. Some might, just luck of the draw.

Back in 2007 I attended some free seminars ran by my broker on how to trade options. There was this older lady who showed up often (perhaps for the free lunch they offered) to brag about her couldn’t lose strategy selling DOTM short duration put and simply rolled if the trade went against her. She inherited some money from her late husband and relying on selling put to generate $5-10K a month for living expenses. Often she max out her margins. Instructor tried to warn her every time but she kept showing up on occasion to announce how successful she was that she had done it since 2004 and it worked long term. Around mid 2008 she completely disappeared. Never saw her again.

 

[BlueWaterSailor]

Around mid 2008 she completely disappeared. Never saw her again.

So: either 1) her strategy served her until the very end, 2) she found a place with a better free lunch, or 3) she blew out her account (but then, she'd definitely show up for the free lunch .) Sounds like a two out of three winning scenario...

 

[winstonwee]

Ok if you just want to trade in options then, then there are other option strategies that are lot more efficient also depending on what you want to do.



You don't. You don't care because that's irrelevant. You will never get the best price because nobody knows the future. You cannot be a perfectionist with trading. You can't always strive for the PERFECT price. You don't get the perfect price either with the option assignment either.
This is my 10th time stating this to you and you still don't get it. I am going to copy and paste next time when you raise the same point.

there is 101 options strategies

sure there is no perfect price but the example you quote me is always perfect price because it is read from the past. I understand that
It has been nice talking to someone that read historical data

 

[winstonwee]

strategy work on uptrend to moderate downtrend
if there is a market crash the strategy lose money but it will lose less because of the premium collected

I sell put because I am bullish on the stock
Why not buy the stock since I am bullish
Because I am always wrong in my assumption most of the time so I want to get paid for being wrong or even right
It is never my intention to buy stock in the first place
I sell put with the hope that I am not assign and sell call with the hope that it get call out

 

[JSOP]

there is 101 options strategies

sure there is no perfect price but the example you quote me is always perfect price because it is read from the past. I understand that
It has been nice talking to someone that read historical data

I never said the price that I used to illustrate to you the concept of opportunity cost is the "perfect" price. WHERE in my numerous posts have I ever said they were the perfect price? You show me one instance I have EVER referred to these prices as the perfect price. I have only said those were the available price at the moment, prices that you could've bought/tp'ed your stock at, reflecting the best choice at the moment. Would really help if you could read my posts for what they are instead of inferring something that is not there.

Told you million times. Prices are just prices. You can never get the "perfect" prices. If you obsess too much about always getting the "perfect" price, you are either going to miss the ride altogether or overtrade.

 

[winstonwee]

I never said the price that I used to illustrate to you the concept of opportunity cost is the "perfect" price. WHERE in my numerous posts have I ever said they were the perfect price? You show me one instance I have EVER referred to these prices as the perfect price. I have only said those were the available price at the moment, prices that you could've bought/tp'ed your stock at, reflecting the best choice at the moment. Would really help if you could read my posts for what they are instead of inferring something that is not there.

Told you million times. Prices are just prices. You can never get the "perfect" prices. If you obsess too much about always getting the "perfect" price, you are either going to miss the ride altogether or overtrade.

I wasn't going for the perfect price. This has never been my aim cos i know i never goanna got it.
You are the one that numerous post say that instead of 58. You can get at 56.37 because the price is available. Everyday the stock make a high and low. We just need to get at low and sell at high we had all be making money because the price is available for any stock

So that come down again to how we get the low and high. Some use chart some use dice
So i choose to use wheel. Hence my title how to buy low sell high
So it was easy when you look back the low is 56.37 it is there u just need to get it. Even if you dont 56.47,57.13 it is there the price is available better than 58.
Oh yeah i got it