Wheel trading - need an opinio

What percent of option traders do YOU think engage in wheel trading ie selling puts? why do you think more people don't do it?

13 comments held Reddit says 0 on reddit ↗

u/Mailynlee_ 1 15 hours ago

People within your niche. Do you have a network and how often do you buy cars?
u/gt-mech58 OP 1 15 hours ago

Huh? I might be obtuse, I meant wheel trading like selling puts not trading car wheels sorry
u/Substantial_Team6751 1 15 hours ago

More people don't do it because the wheel underperforms buy and hold. And once people get left holding the bag, they might sour on the wheel.
u/gt-mech58 OP 1 15 hours ago

not on margin tho, and you can roll I guess
u/iron_condor34 1 15 hours ago

Rolling bc you're in a losing trade just isn't the best idea. Take the loss and deal with it
u/Small-Horror-7088 1 15 hours ago

The underperformance gets real obvious when the market rips and you capped your upside with a covered call
u/Retired-Programmer 1 15 hours ago

I wheel trade as well as covered calls etc and also buy and hold. Just depends on the situation on what all I do. But for sure when you sell a $100 strike put on a $102/shr stock and then the next week the stock shoots to $120/shr and then you wait for the stock to retreat some and then it shoots further on up to $150/shr it makes you think twice about *why the f didn't I buy the stock*.
u/gt-mech58 OP 1 15 hours ago

eh don't blame urself for the market's unpredictability, how predictable is that rally rlly? u cant predict news
u/Wood_Ring 1 15 hours ago

The wheel strategy is essentially selling puts, but as generally practiced, it’s more like flipping between selling out of the money puts until a sharp move down, then selling in the money puts until a big move up. No idea what percentage of people do this, but I think it’s very much a beginner thing; very few traders who actually understand options are likely to be trading this way.
u/Teiagon 1 15 hours ago

The wheel is a buy-and-hold type of trade, it has the same risk as holding stocks but it is limited to the upside so I assume many people would prefer just holding stocks.
u/iron_condor34 1 15 hours ago

It does no good to just be short vol or long vol. You should price vol to see if its cheap or not and worth it for you to sell/buy. And do so accordingly. There's nothing wrong with selling puts btw. But just blindly doing it like seem to do is just a big loss waiting to happen.
u/gt-mech58 OP 1 14 hours ago

backtesting wheel trades/rolling yeilds 50% return per year on qqq, regardless if it goes up or down... I think for the big loss point, the max you would have to roll is one month from 2016 to 2026 before closing for a profit, and that was the trump tariff month... is there a reason you didn't just roll in your previous losses? I'd bet you could get out of of it within a month or so
u/iron_condor34 1 14 hours ago

So, stick with a losing trade for a month? No lol Where did you backtest that?