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

[JSOP]

you have obviously didnt know what my plan was


I have roll my nio put 50 down to 45 (was this the best choice nobody know). I roll because I change my mind, I change my mind all the time. and I get paid to change my mind for rolling it further away

to save you time and agony you can skip to the 10 mins part and watch this

now again you are using the yesterday data to see what could have been better. If I can have the benefit of hindsight I would do even better
Now back to my sell call on 22nd Feb I sell the 58 call for 3.10 (I get to keep the premium regardless of what NIO does) this is opportunity cost to make extra $3.10 (of course if I were to know NIO is going to 68 on next wednesday than I wouldnt sell the call, but I didnt have the next week price data available to me) and if NIO were to go up near 58. I could change my mind again. or I could be contented with 1 full cycle and take a break and restart another wheel.
All this sell call and sell put bring extra premium to lower my price and that is what the whole wheel is

it is not the best and not the holy grail it work on uptrend market we all know that

Ok you don't understand what I wrote. You can roll all you want but it still does not hide the fact that 1) you overpay for the stock that you buy and 2) you undersell the stock when you tp at the same given price level. It does not require hindsight. It was happening right there. When you got assigned, the price was trading $56.27!! It's not like I could only see from now that the price was at $56.27. It was trading at $56.27 right there and then that you could've bought the stock at but you had to buy it for $58. Whether you could get filled or not or whether that's the best price level for the future is irrelevant. For a given price level that is available, you will always overpay and you will undersell with the wheel. That's my point. You don't choose to care that's your choice but you can't deny that's how it is.

And 3) you hide loss that you incur on your underlying and can never tp unless being called away just for the sake of covering for the call in order to earn your income that's at best barely covers your loss leaving you a net income, if any of just couple of cents. Take your current put with the strike of $45 expiring in March 5th that you just wrote for $1.60 for example, should the price REALLY falls below $45, assuming $44.99 just to make it as a best scenario, then your loss on your current stock that you bought for $58 would be (44.99 - 58) = $13.01!!, lot larger than just $1.60 that you received for writing that put and is still larger than even $12.47 that you earned so far from writing all the options and you would've been assigned again for more shares of a losing stock at $45 instead of just $44.99 if you ever wanted to buy or even just stayed away. If you look at the other direction where you wrote a call with a strike of $58 to call your stock away to break even, what if the stock never reaches that level? Then you will forever be holding a losing stock that you overpaid with a loss that at least eats away at your option income. If it goes up to $68 next week, then you will be suffering an even bigger opportunity cost of (58 - 68) $10 unless you close the option receiving hopefully some of the premiums or at a loss. Yes sure you can change your mind at any time but the payment for changing your mind is always 1) smaller than what you could've gotten and 2) wrings with more possibility of not being able to cover the losses from changing your mind.

People like to compare writing naked options as picking up pennies in front of a steamroller that's charging ahead. I like to think the wheel strategy as driving on a highway with a shopping cart with the hand brake on while having a SUV as the roof of the cart. IMHO.

 

[JSOP]

For the last time, claiming that the wheel forces you to buy high does not make sense because the opposite occurs: when you are assigned the put, you are getting it at a lower price than was possible when you decided the underlying was a good buy.

That is NOT possible with an assignment from shorting a put, an OTM put. The best you can pray for is not get gapped.

 

[JSOP]

JSOP keeps referring to the case that the stock drops and you're not assigned, as if somehow having sold the first put magically hinders you from buying stock or selling yet another put at a later time.

Ok I am putting you on "Ignore". If you don't even bother to read my posts and just want to twist my words around for the sake of trolling, I don't want to waste any more time with you. Posting in this thread is so far very productive. Got rid of two trolls already.

 

[winstonwee]

Ok you don't understand what I wrote. You can roll all you want but it still does not hide the fact that 1) you overpay for the stock that you buy and 2) you undersell the stock when you tp at the same given price level. It does not require hindsight. It was happening right there. When you got assigned, the price was trading $56.27!! It's not like I could only see from now that the price was at $56.27. It was trading at $56.27 right there and then that you could've bought the stock at but you had to buy it for $58. Whether you could get filled or not or whether that's the best price level for the future is irrelevant. For a given price level that is available, you will always overpay and you will undersell with the wheel. That's my point. You don't choose to care that's your choice but you can't deny that's how it is.

And 3) you hide loss that you incur on your underlying and can never tp unless being called away just for the sake of covering for the call in order to earn your income that's at best barely covers your loss leaving you a net income, if any of just couple of cents. Take your current put with the strike of $45 expiring in March 5th that you just wrote for $1.60 for example, should the price REALLY falls below $45, assuming $44.99 just to make it as a best scenario, then your loss on your current stock that you bought for $58 would be (44.99 - 58) = $13.01!!, lot larger than just $1.60 that you received for writing that put and is still larger than even $12.47 that you earned so far from writing all the options and you would've been assigned again for more shares of a losing stock at $45 instead of just $44.99 if you ever wanted to buy or even just stayed away. If you look at the other direction where you wrote a call with a strike of $58 to call your stock away to break even, what if the stock never reaches that level? Then you will forever be holding a losing stock that you overpaid with a loss that at least eats away at your option income. If it goes up to $68 next week, then you will be suffering an even bigger opportunity cost of (58 - 68) $10 unless you close the option receiving hopefully some of the premiums or at a loss. Yes sure you can change your mind at any time but the payment for changing your mind is always 1) smaller than what you could've gotten and 2) wrings with more possibility of not being able to cover the losses from changing your mind.

People like to compare writing naked options as picking up pennies in front of a steamroller that's charging ahead. I like to think the wheel strategy as driving on a highway with a shopping cart with the hand brake on while having a SUV as the roof of the cart. IMHO.

sorry I couldnt help but laugh at this post.
Again you only see I bought NIO at 58 and now I am losing 13.01. You have or choose to forget all the past 2 month that I collected the premium and I was actually up on my nio even thou nio has drop against my assign price

well everyday price is available to everyone. when i sell a 58 put or 45 put for next week
the 45 is not available to me yet not at this moment. It could never be available to me but when it is not available to me I get to keep the premium

again now then i sell 58 call the price of 58 is not available to me and may never be for a long time but i am happy to collect 3.10 while waiting for the price to be available to me

and also all this while of you talking about available price is because you have a crystal ball and looking at past data it is easy to say instead of buying at 58 you see you can buy it at 56.37 look how much you are overpaying, that is because you are looking at the past.

I always say what is the best available price for NIO today you think? And what is the best tp price you think for nio today before market open? Or you need to consult your astrology chart and use some ruler to get the figure or maybe tomorrow you can tell me what price is available and what is the best available price.
By the way i know how to read the low of the price yesterday I just cannot read the low of the bar for tomorrow

 

[JSOP]

sorry I couldnt help but laugh at this post.
Again you only see I bought NIO at 58 and now I am losing 13.01. You have or choose to forget all the past 2 month that I collected the premium and I was actually up on my nio even thou nio has drop against my assign price

Did you see I added all of your premiums up and said the total as $12.47???!! That's how much you earned so far as income from writing all the options. But your loss right now from the purchase price of $58 to today's closing price of $49.11 is (49.11 - 58) = $8.89 so that gives you a net income of only $3.58. But if the price drops even further (hopefully not) to the strike of the put at $45, your loss would be $13.00, larger than what you've earned from your premiums.

Take your current put with the strike of $45 expiring in March 5th that you just wrote for $1.60 for example, should the price REALLY falls below $45, assuming $44.99 just to make it as a best scenario, then your loss on your current stock that you bought for $58 would be (44.99 - 58) = $13.01!!, lot larger than just $1.60 that you received for writing that put and is still larger than even $12.47 that you earned so far from writing all the options

well everyday price is available to everyone. when i sell a 58 put or 45 put for next week
the 45 is not available to me yet not at this moment. It could never be available to me but when it is not available to me I get to keep the premium

again now then i sell 58 call the price of 58 is not available to me and may never be for a long time but i am happy to collect 3.10 while waiting for the price to be available to me

and also all this while of you talking about available price is because you have a crystal ball and looking at past data it is easy to say instead of buying at 58 you see you can buy it at 56.37 look how much you are overpaying, that is because you are looking at the past.

I always say what is the best available price for NIO today you think? And what is the best tp price you think for nio today before market open? Or you need to consult your astrology chart and use some ruler to get the figure or maybe tomorrow you can tell me what price is available and what is the best available price.
By the way i know how to read the low of the price yesterday I just cannot read the low of the bar for tomorrow

Yes but when these prices are available to you, you will be forced to pay MORE than those prices to buy and get LESS than those prices to sell. Whereas when those prices are not available to us, we just wait and when those prices are available to us, we don't pay less or more, we get that price exactly. We don't need to forecast, we just take the price and go. Yes you get compensated for taking a chance that you overpay and undersell but those compensation is not worth it in our eyes because you can get under-compensated and when you get under-compensated, you get under-compensated a lot. And to us, it's not worth it especially if you take into account of all the lost tp opportunities that you have to give up in order to keep your calls covered, that SUV can get quite heavy on top of your shopping cart.

 

[systematictrader]

I sell strangles on stuff like PM, PG, PEP, COST where I'm not expecting a big move either direction even ahead of earnings. I would not sell a call on a meme stock. I did sell puts on GME far OTM (10 strike and 12 strike after it had already moved to $100 and so far those worked out well...already took half the position off at 70% profit). Bottom line, it's hard to use a one-size-fits-all system for selling options. You need to know your risk and assess each opportunity individually.

beautiful

 

[winstonwee]

Did you see I added all of your premiums up and said the total as $12.47???!! That's how much you earned so far as income from writing all the options. But your loss right now from the purchase price of $58 to today's closing price of $49.11 is (49.11 - 58) = $8.89 so that gives you a net income of only $3.58. But if the price drops even further (hopefully not) to the strike of the put at $45, your loss would be $13.00, larger than what you've earned from your premiums.





Yes but when these prices are available to you, you will be forced to pay MORE than those prices to buy and get LESS than those prices to sell. Whereas when those prices are not available to us, we just wait and when those prices are available to us, we don't pay less or more, we get that price exactly. We don't need to forecast, we just take the price and go. Yes you get compensated for taking a chance that you overpay and undersell but those compensation is not worth it in our eyes because you can get under-compensated and when you get under-compensated, you get under-compensated a lot. And to us, it's not worth it especially if you take into account of all the lost tp opportunities that you have to give up in order to keep your calls covered, that SUV can get quite heavy on top of your shopping cart.

precisely I am up on my trade now., Suppose I didnt do all this and get to buy the NIO at 56.37 instead of 58. And not selling any call on it. Yes I get a better price assuming I am able to know to get it at 56.37 and not 56.40. The trade would be a loss now and have to wait for it to go above 56.37

On a 2nd point. I have another put at 45. Now I assuming I want to own stock at 45. So I sell a CSP, your theory was i am paying more because when price is available it will be more cheaper. So following your theory we would sit duck waiting for price to drop to 45 could be today tmr or next week. When price drop to 44.50 (is that a available yes, but right before you click submit the price drop to 43.50 yes that is even better, now looking at the chart it seem 41 is coming but wait a second the price is now at 44.45, so which price should i take. Before you know it the price is at 45.25.

 

[JSOP]

precisely I am up on my trade now., Suppose I didnt do all this and get to buy the NIO at 56.37 instead of 58. And not selling any call on it. Yes I get a better price assuming I am able to know to get it at 56.37 and not 56.40. The trade would be a loss now and have to wait for it to go above 56.37

If you didn't do all the option shorting, you would've been able to buy the stock at $56.27 at one point, you would've been able to sell it at $62.XX somewhere in Jan. when the price hit even as high as $64.52 pocketing a difference a (62.50 assumed price - 56.27) = $6.23 long time ago. And even if you tp'ed at lower price than $62.XX, you would've still been able to pocket some profit instead of a loss now of (49.11 - 58) = -$8.89 even after being offset by all the option income of $12.47, still just an income of $3.58, just half of what you could've made by just trading in the underlying or just buying calls and that's assuming that you didn't ride it back down. You could've very well short it at $62.XX or lower at $51 and even at 50 and still be able to make a profit now assuming a current closing price of $49.11 Because you are free to take whatever price you want and you don't have to hold the underlying to cover for the options, you can do whatever you want. You get paid for changing your mind we get paid for changing our minds too except our payment is bigger.

 

[winstonwee]

If you didn't all the option shorting, you would've been able to buy the stock at $56.27 at one point, you would've been able to sell it at $62.XX somewhere in Jan. when the price hit even as high as $64.52 pocketing a difference a (62.50 assumed price - 56.27) = $6.23 long time ago instead of a loss now of (49.11 - 58) = -$8.89 even after being offset by all the option income of $12.47, still just an income of $3.58, just half of what you could've made by just trading in the underlying or just buying calls and that's assuming that you didn't ride it back down. You could've very well short it at $62.XX or lower at $51 and even at 50 and still be able to make a profit now assuming a current closing price of $49.11 Because you are free to take whatever price you want and you don't have to hold the underlying to cover for the options, you can do whatever you want. You get paid for changing your mind we get paid for changing our minds too except our payment is bigger.

sorry I have to laugh
yes look at last month data I could tell you what to do at which point exactly even look at yesterday data I can tell you where to buy and sell multiple time. That is because we have the hindsight benefit.
Well I was bad at reading chart which is why I choose the wheel

Now can I ask you how should we play the NIO today. Which point should we buy or sell?
Without the benefit of hindsight can you tell me or everyone else. I begging you

You are good at reading yesterday data. Can you read tomorrow data?

 

[JSOP]

On a 2nd point. I have another put at 45. Now I assuming I want to own stock at 45. So I sell a CSP, your theory was i am paying more because when price is available it will be more cheaper. So following your theory we would sit duck waiting for price to drop to 45 could be today tmr or next week. When price drop to 44.50 (is that a available yes, but right before you click submit the price drop to 43.50 yes that is even better, now looking at the chart it seem 41 is coming but wait a second the price is now at 44.45, so which price should i take. Before you know it the price is at 45.25.

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.