Month 2 of Covered calls and cash-secured puts.

This month's results of the wheel strategy.

What I learned.

This is a slow process.

Don’t go looking for trades every day. When things don’t seem right. Pause.

I kept looking for deals and kept trying to trade so I could keep collecting that premium. Yet nothing fit my criteria.

Yet I still traded.

Which resulted in being assigned.

Being assigned isn’t the worst thing in the world. Especially if you believe in the company or want to own the ETF. Yet for weekly cash-secured puts, it is generally better to avoid assignment.

I wish I had taken a step back.

Hit pause.

Photo by Fabian Møller on Unsplash

I wish I had allowed the money to stay in my account or kept collecting (smaller), safer premiums. Even if you're collecting .5% or .25% for the week. It’s not the end of the world. Especially if it has a 80% POP or a good enough Delta.

None of this is financial advice. It’s all just my opinion and what I am doing and looking for.

Your money is your money.

April is earnings season. Good for day traders. Bad for us wheel option traders.

You change from an investor to more of a gambler.

more like my real preformance over

As low as this is, it's still above the S&P 500's 10% average.

What I was assigned

GRAB —

Overall, I made a profit on this, especially when you consider the premiums and the covered call I executed after I was assigned. No matter what happens to that covered call, I am up.

Yet I didn’t need to get assigned. I had the money in my account and I ‘needed’ it to be used. To get a premium.

MAIN

My big position held up my cash. This is quite disappointing. I would rather hold the cash for puts than use it for calls at the moment.

The lesson is still the same.

I need to take a moment before needing to use up my cash.

It is still something I own. I believe it's a good entry. I'll be moving onto covered calls.

The wheel strategy is pretty simple. It takes out the emotion. Gives you a clear plan to follow. You just have to follow it.

I will aim to keep my strike in a good enough place that I’ll get good enough returns.

This is only month 2.

I still have a lot to learn.

I need to realize this and take back my time and control.

I am looking for a different ‘main’ (no pun intended) stock to make premiums from. I have more research to do for next month.

The importance of wanting the companies.

I am happy to buy all of these companies at the mentioned price. It also allows me to move on to the second stage of the wheel strategy, where I can run covered calls.

I would be in a terrible situation if I were assigned companies I had no faith in. Companies I don’t want to own.

AT&T is a company you can do alright with when trading covered calls. Yet it is a company I would never want to own. I am currently trying to sell my AT&T shares in my investment portfolio. There is no way I would want it in my wheel strategy.

The importance of liquidity.

Liquidity is the ability to enter and exit with ease. If a trade is going badly. You have to be able to get out of it. If you want to sell your position. There have to be enough people to sell to.

Simple. Yet this month taught me its importance.

There was one or two trades I shouldn’t have been in.

Yet I still traded.

The big lesson from this month is patients.

Patience is key.

Only do a trade when you have a good deal on the table.

Were still doing good.

5% in 2 months!

A lot of lessons learned, but we were still in the green. Almost 5% in 3 months is good. Were still making a high enough return for it to be worth it.

I have seen some of my calls go to -300%. This is unrealized, and I am happy to let it go so it can be assigned. It doesn’t fully account for the fact that I own the company's shares. So really, it’s not that bad.

Yet it is still a hard watch.

It’s important not to lose yourself in the numbers, being assigned, or rushing trades.

This process is slow.

I look forward to checking in next month.

more from me.