Hi This is a topic that most are interest in. I am interested in as well We all want and love to buy low and sell high but it is easier said than done. In fact it is extremely diffcult to be able to do that. If you look at my portfolio I am always buying the stock at the high. We can use some technical analysis or candlestick pattern or macd to time your trade but that is at best to me 50/50 maybe I wasnt good enough Today market is at all time high most of the stock is at all time high so how do we buy low and sell high? Today I present you a strategy that you can achieve a buy low and sell high Wait for Stock to pull back a bit Sell a Cash Secured Put for 1% premium Roll the Put to a Lower Strike (not necessary step) Get Assign the Stock (buy low achieve) Sell Covered call Roll the Call Higher (not necessary step) Stock get Call away (sell high achieve) Repeat the whole process on other stock In Fact I have made over $5000 using this strategy in Jan 2021 and make over 50% last year trading this alone Winston Wee I welcome all feedback and comment and discussion
What happens when stock gaps and you get assigned at a price which may be 5-15% away from your strike? The price will be too far away to sell calls to be worth it.
then a different strategy have to be employed you may have to do a ratio call spread example you buy stock at $100 it drop to $50 you may have to buy 1 call at 60 and sell 2 call at 80 for breakeven then when market move to 80 you still can get out at breakeven, the stock dont have to move back to 100 to breakeven no foolproof way there is always risk, if you think the stock will come back (usually after bad news or stock market correction than is ok to wait a while) if you think the fundamental of the stock has change than you should discard the position away and recover from another stock
Ancient "system" sometimes touted by scammers. Likely to do a little better than the markets in down to flatish conditions. And worse during strong bull runs. Does it work? Sure, but so does just dollar cost averaging. Higher percent gains can be achieved with more leverage, just like anything else. But at the cost of higher drawdowns and risk. There are several indices and funds (like $BXM) that show the effects of regular buy-writes over time. Compare their returns to SP500 and see if this is really worth it. Maybe it will be? Up to you... Edit: If you are selling or promoting any service on this site, please communicate with Baron for payment to be a Sponsor. Otherwise, you will be gone in a hurry.
sorry not to get into a debate if this can be compare to $BXM because what I am doing is on a higher volatile stock than S&P index or SPY for that matter, I am doing on high IV stock NIO, BLNK ,OPEN ,FUBO, IPOE, UAVS, NNDM, FSR, PLTR I do it on stable stock too AAPL, AMD but ultimately what we want is to diversified our portfolio. But I have to agree if there is a stock market crash like what we seen in the past (2020, 2008, 1997, 1987) I would be losing money. But i use very little leverage even when I am entitle to it. I use a margin account on thinkorswim but I keep enough cash to buy over the stock in full cash. So if there is a stock market crash I could wait it out (market always come back proven many times in history) or I may have to take a big loss. I dont know what I would do if that happen I hope I never have to find out
Keep in mind two things: 1. “The Wheel” is an illusion since selling covered calls vs naked puts are identical when executed at the same strike. Yes, wheeling can make it easier conceptually, but if anyone wants to run backtests on this then they can simply test selling naked puts. 2. It’s unprofessional to speculate, theorize, promote or use any method just based on fluff and good feelings, without backtesting. There are plenty of backtesting tools where you can demonstrate strategy performance over 10-20 years, without speculating and pretending that you know more than a professional backtest will show. “I have made $5000” looks amateurish without full stats, sharpe ratio, drawdowns, etc, shown over many years.
I agree with your post in general but I keep seeing people throw this "covered call == naked put" mantra and it's just not true The difference: when trading covered calls you also get dividends.
I've done that. To make $5k in one month with a $30k account, you must be using full margin. That's fine as long as the market keeps going higher. However, when I used that strategy (still do, but more selectively), I ended up carrying dead money junk in my portfolio for a while. Example, buying CHK at $7 that eventually went bankrupt. Buying KSS at $47, UAL at $80 / $65, WYNN at $115, and MPC at $80 only to watch them all drop substantially last February. Still holding though except for KSS...finally dumped that this week at a small profit considering all the calls I was able to sell against it.