Hi Impatient Investors!

The wheel strategy isn’t really appealing with a small portfolio. No investments that don’t have much money involved is really not that appealing. Investments are more lucrative when more money is involved. In this case, the concentration will be on the percentage gain, not the dollar amount. So don’t be discouraged small investors. There’s ways to make 1% per week, not great if you’re impatient but it can be lucrative.

So what is the wheel strategy? Check out the posts about selling options. for further details about those strategies. The wheel strategy is a combination of the 2. Selling puts until the stocks are assigned and selling calls once assigned. With proper analysis and outlook, this could be lucrative. The wheel strategy should be used on solid stocks that you would want to own and perceive that it will increase over time.

Premiums from Selling Options

The premiums are the bread and butter of this strategy. It’s important to to chose correct stocks and hopefully the stock can grow while selling calls. But back to the premiums, the premiums are a major portion of the equation. If you can sell an option per week and receive premium, then you’ve essentially created cash flow or income. The premiums can be withdrawn, used to buy new stocks or options, it’s your money. The premiums can be compounded and might be sizable over time.

Wheel Strategy Explained

This strategy is a combination of the two strategies. Sell a cash secured put to receive premium. When the option expires, you will either keep the premium and get to keep the cash set aside, you can then sell a cash secured put with a different expiration date or be placed the stock in which you can use to sell calls . This continues the wheel strategy. Collect premiums weekly, utilize those cash payments within your portfolio however you like and keep running the wheel.

Testing

Normally on this site, there are examples to hash out some of these more complex topics but for the wheel strategy, let’s test it in an ongoing way. A challenge is coming, the date and details is TBD.

Stay tuned!

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