"The Wheel" is a popular options strategy that involves continually writing options . Depending on what stage you are in the wheel strategy, you either sell a cash-covered put, or sell a covered call.
When selling a cash-covered put, you must have the cash collateral to buy the shares in the case it expires in the money. (Or at least most brokers require you to have this cash! 😄)
When selling covered call, you must have a call's form of collateral, which is 100 shares of the underlying. (Again, at least most brokers require you to do this! 😄)
And so The Wheel goes on and on, where you continually earn premiums on the contracts that you sell. Often, traders will line up what to run on their wheel at the beginning of a given month, and monitor the trades throughout the month as the contracts move towards expiry.
In today's "🦘Kangaroo Market🦘", as I like to call it, there seems to be an infinite supply of meme stocks like GME, AMC, NOK, and the like . In short, the market is ripe with these high volatility stocks which cause premiums on options to skyrocket - perfect victims for The Wheel 😈.
In summary, The Wheel strategy is a great one if you are looking to make some option premiums on shares of companies that you would like to own or that you would like to own in the future. That's the beauty of The Wheel.
The problem is, there's just too much noise these days. But I've made it easy for you - scanning the entire market (7000+ securities and 0+ contracts) to find those juiciest 🍑 trades which offer the highest reward vs. risk, against the relative recommendations and ratings of the underlying itself.Got It - To The Dashboard!