I'm having trouble deciding how to execute my wheel, specifically on the call side. They say to only wheel stocks you're ok with holding which is what I've done. Now that I've been assigned on my CSPs, do I sell a call (which is more than my cost basis) and let it get assigned, gaining profit from the call and the stock sale? Or do I roll it out when ITM and risk losing out on higher premium chances, but keep my shares? Since these are stocks I want to own anyway, am I better off with stocks at a (relatively) cheap price? Or do I take the profit of the increased stock value and re-wheel it?
What is your strategy?
Posted by El_Jeffe24
4 Comments
Whats your end game here? Are you trying to acquire shares when it dips to hold long term or are you just interested in collecting premium?
I wheel for the premium. If I got assigned shares on a CSP and then on market open the next day the stock went above cost basis I’d either sell CCs on it or just sell the shares depending on the stock and how much I’m in the green
With your stocks probably hard for you to do. I have NEE, XOM, and WMT. I plan to hold for over 5 years, some held longer.
I just get higher dividend growth that moves my roi , and higher CC premium. My dividend on XOM is like 7-8 percent and still growing , just add in the CC, and I’m at a high percent.
Over 20 % on those just raises my roi,, some will be paid off with in a year. You guys be asking the wrong questions. Same logic can be applied to long calls.
Depends on your directional assumptions of the underlying. In general, I’ll roll a call that is .25-.4 and .6-.75 delta (in order to maximize theta exposure), but will wait to expiration on the rest of the delta’s.
For my personal mechanics, I identify the Monday and Friday (days with greatest IV) closest to 20DTE as my “roll days.” If I don’t roll then, I’m riding to expiration.
Do you want the stock long-term or not?
If yes, hold and keep selling far OTM calls. If no, use closer ATM and get called away with bigger premium and move on