I started by selling puts on stocks that I would like to own anyway so if someone exercised their option, I now own 100 shares. Then I sold a covered call for about $5.00 OTM to collect more premium. Finally, if that gets called away, I simply sell to open another put somewhere OTM for the same stock or buy something else and do the same thing. Has anyone else tried this strategy?
OP, groundbreaking for sure, be surprised if it hadn't already been tried.... Could you post a trade on a stock that you would sell puts on? Or what about trying your 'sell put' strategy on this one, NCLH last at $12.50 https://www.barchart.com/stocks/quotes/NCLH/options?expiration=2020-06-19 post back which put option strike it was that you sold with expiry date? hint: for put options expiring June ....either $7.50 put, pick up $1 $10 put,pick up $1.95 or what about $20 put, pick up $8.60
Sounds interesting but right now, I'm sticking to airline stocks over cruise lines. In my opinion, one is essential and the other is a luxury. Just my thoughts
If you think stocks have made a low and that we face an L shaped recovery, it may be the most lucrative general strategy going forward. Roughly inline with a buy and hold with dividend payers. It would be better to have a more rigorous definition of stocks that you "like". And the maximum dollar exposure you have to each stock/sector. If you intend to have a levered exposure to equities, you need to think harder about what you are doing.
This strategy (the wheel) was discussed many times here and everywhere else where traders discuss options, sometimes with very long threads. Keep in mind that selling a coveted call is mathematically identical to selling a naked put, so this strategy is identical to either always selling naked puts, or always selling covered calls. For example when selling naked puts and you’re assigned shares, you could sell them immediately and sell another naked put for the same outcome. Unfortunately this strategy doesn’t do much and usually returns are about the same as holding shares, sometimes it can work a little better and sometimes a little worse. Take a look at various put writing ETFs that do the same, so that you don’t have to. Though many of them closed due to poor performance and lack of interest. CBOE also publishes performance of those strategies at https://www.cboe.com/micro/buywrite/benchmarks-fact-sheet.pdf And https://www.google.com/search?q=cboe+put+write+index
Edward Deming used to say there is no substitute for profound knowledge. You can make money buying put, call, selling put, call and wheeling too. The devil is in the details. I don't want to be negative, if you are interested, use your logic and construct scenarios where wheeling works and where it doesn't and get a good feel for that strategy. Been there done that. Let's just say I now do not automatically wheel. Welcome and best wishes to you.