5 Questions
What is the Wheel Strategy?
A long-term stock acquisition strategy
What is an advantage of the Wheel Strategy?
It allows investors to purchase stock at a discount
What is one of the drawbacks of the Wheel Strategy?
It requires patience
What type of options should be used for the Wheel Strategy?
Shorter-dated options
How can OptionsPlay help with the Wheel Strategy?
By providing daily updated reports
Study Notes
- The Wheel Strategy is a long-term stock acquisition strategy that allows investors to systematically obtain stock at a discount (using Cash Secured Puts) and, in the event of getting assigned, purchase the stock at the short put strike and start selling Covered Calls to generate additional income.
- The strategy requires patience as trades generally only execute at expiration. Additionally, the price could rally well above the strike price of the covered call, which causes the investor to miss out on extra capital appreciation.
- Use shorter-dated options to maximize time decay (4-7 weeks). Use aggressive strikes (higher delta) for Cash Secured Puts to maximize income.
- The Wheel Strategy is a conservative strategy that uses lower delta options to acquire stocks.
- The Optimal Short Put and Covered Call Reports from OptionsPlay can help investors find the best candidates for this strategy.
- Both reports are updated daily and follow best practices while highlighting all relevant information.
- The Wheel Strategy can be used to acquire stocks efficiently and generate consistent income.
Test your knowledge about the Wheel Strategy, a long-term stock acquisition method involving Cash Secured Puts, Covered Calls, and utilizing shorter-dated options. Learn about maximizing time decay, using aggressive strikes, and finding optimal candidates using OptionsPlay reports.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
