Wheel Strategy Tips – How to "Fly Rescue Missions"

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Wheel Strategy Tips – How to “fly rescue missions” – Coffee With Markus | Episode 143

You might have heard me talking about “rescue missions” when a Wheel Strategy Trade is in trouble.

In this video, I will show you exactly what that means and also talk about more wheel strategy tips, e.g. trading the wheel option strategy, trading the wheel in a down market, and several the wheel option strategy example.

Here’s the agenda:

Intro: 0:00
Wheel Strategy Overview: 2:33
What Are Rescue Missions?: 4:45
How Do You Fly A Rescue Mission?: 8:57
When Should You Fly A Rescue Mission?: 11:35
Important Rules: 23:25
Deep Dive Q&A: 33:55

The Wheel Strategy Overview:
1) Sell Put options and collect premium
2) You may or may not get assigned
3) when you are assigned, you sell calls and collect more premium.

– Problem
* What if you can’t get enough premium for the calls? (at least 30% annualized)
* Don’t sell below the assigned strike price.

Rescue Missions:
– You sell more put options below the assigned strike price
– Advantage:
* You collect more premium
* If you are getting assigned,
* you lower your cost basis
– Easier to get out of the trade

RIDE example:
– Got assigned at 21.50, currently trading at 16.23 (100 shares)
– The idea is to sell strike price at 11.50 put, collect more premium.
– If assigned, we would own 100 more shares at 11.50.
– This would bring the average per share down from the initial 21.50/share to 16.50/share, lowering our dollar cost basis making it easier to get out of the trade.

How Do You Fly A Rescue Mission?
– Sell Put below the assigned strike
– Same amount or more
– Follow the Wheel Calculator
* I want to make at least 30% annualized

When Should You Fly A Rescue Mission?
– Only if you can’t get enough premium for the calls
– WAIT!!!
* Don’t fly rescue missions too early!
* You need to keep your powder dry (MARGIN)
– Only consider this if the stocks went down at least 30% from your assigned price

Examples:
AAPL: down 12% — NO rescue mission
GDXJ: down 9% — NO rescue mission
RIDE: down 24% — NO rescue mission yet
* We can start thinking about it

IMPORTANT:
You can’t rescue every trade!

5 Stocks NOT to sell puts on when trading The Wheel:
– “Reddit Stocks”: GME, AMC, BB, BBBY, SLV
– Stocks with earnings before expiration
– Stocks with Phase 3 clinical trial (SRPT)
– Crazy stocks
– Stocks with premiums that are too good to be true
* Stocks above
* Leveraged ETFs (2x, 3x, …)

Summary
– Yes, you can fly rescue missions
– Don’t trade “stupid stocks” (see above)
– Have a plan BEFORE you sell puts
* Where’s the next support level
* Rescue Mission
– Don’t panic
– Don’t start flying rescue missions too early

Recommended Links & Videos:
How To Find The Best Stocks For The Wheel (Last Video): https://youtu.be/nHkZNLR2P2Y
The Wheel Strategy Playlist: https://youtube.com/playlist?list=PLBa3sAx-Io2nosgosERUhIZwzvIgD-3Vq
How to find strong support and resistance: https://www.youtube.com/watch?v=ZkEOuWW5GVc
Wheel Book Waitlist: https://www.rockwelltrading.com/wheelbook
Rockwell Merchandise: https://store.rockwelltrading.com/

#StockMarket #OptionsTrading
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Comments

Markus Heitkoetter says:

If you need more wheel strategy tips or other info about trading the wheel option strategy, leave a comment below.

Recommended Links & Videos:

How To Find The Best Stocks For The Wheel (Last Video): https://youtu.be/nHkZNLR2P2Y

The Wheel Strategy Playlist: https://youtube.com/playlist?list=PLBa3sAx-Io2nosgosERUhIZwzvIgD-3Vq

How to find strong support and resistance: https://www.youtube.com/watch?v=ZkEOuWW5GVc

Wheel Book Waitlist: https://www.rockwelltrading.com/wheelbook

Rockwell Merchandise: https://store.rockwelltrading.com/

Skyhawk says:

Hi markus,is there a pdf available from this session?

James Belch says:

Where you sold AAPL puts on your account. Would it not have been better to sell covered calls?

James Belch says:

This is much better then watching Netflix

James Belch says:

Markus, Thank you for being real here.

ruthlessebk says:

Great video, but correct me if I am wrong, but getting assigned on the second put reduces your average cost per share, but increases your cost basis because your holding is larger. It's the premium collecting that reduces the cost basis.

Alisani Brazil says:

Thank you for making your content extremely easy to understand!

Ruminations from the Trailer Park says:

I find your videos invaluable. Thank you Markus

高兴Tophe says:

The capitalisation is very Deutsch… Did you say stonk at 3:15?

NyteShade76 says:

My favorite part was when Markus told me I can eat ice cream for breakfast. I always wanted to do that. I'm a rebel at heart. Thank you Markus <3
On a more serious note, these Wheel Strategy Tips are extremely useful for a new trader or someone who wants to try a different strategy more adapted to the current market. I love watching this series while I am having breakfast, eating cookie dough ice cream. Cheers Markus!

Brad Litwin says:

OUCH – RIDE

Evan says:

what does 30% annualized mean in this video

GuitarHead says:

Thank you Markus, great info, nevertheless, to avoid getting assigned can't we do a roll-out date-wise and roll down price-wise in the case of selling puts, and in the case of Covered calls, roll-out, and roll-up?

Ron says:

Excellent content, just what was needed after couple of weeks of correction in the market. Loved it! Thank you Markus!

John X says:

Thank you for the very useful information! Just one question what would you do when you have a few dead soldiers and they are all diddling around 10-20% loss all the time? too early to fly rescue mission but also not enough premium to sell calls?

Kao Saelee says:

Hello Markus, is the charting graph your using from Tradingview or is it on the Power x optimizer software? Thank you

Taha says:

30% annualized return on Buying power; could kindly please do the math. Thx

Mr Bee says:

whats your 30% formula?

Mr Bee says:

How are you deciding the 30%…formula please?

Alba Anderson says:

What should your stop loss be for a trade? And is the same for stocks and crypto?

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