I am using fidelity and have started doing the wheel. For some reason I am having trouble seeing just when I get paid for selling my puts. I freely state that it is likely a function of me having so many trades going between buying stock selling several calls and puts. (IE if I would just let everything settle and then just do 1 trade and track that I could likely figure it out, but well, I am trading and have buy to close orders on anything with $10 or more premium.) Questions are: When selling a call, just when will I see the premium in my settled cash? When selling a put, just when will I see the premium in my settled cash? The reason I am wanting to know this is so I can transfer the premium to another acct that I just opened and keep it separate so I can save a nest egg to start another contract when I get around $500, rinse and repeat. Presumably each time would be faster since I would be having premiums on the new contracts. Again this would be specifically for fidelity, assuming each broker does things 'their way'. Thank you for any help, it is much appreciated!
Hello Shinji! It is my understanding that the options settlement period is one day, next day. I have a Fidelity account that I am using for day trades. The settlement period is supposed to be two days but I swear it seems longer. Fidelity just seems slow in comparison to my other accounts. I suggest you contact your account rep or customer support with your questions. I also recommend that you setup another account elsewhere if you require speed. You might consider taking a day off from trading every couple of weeks so that everything can settle, you can track your progress and do your transfers then. Good luck to you!
Aside from the +1 settlement, you should review your understanding of how premium selling works. If you could simply withdraw it right after you sold it, then all you'd have to do is sell premium, grab the money, and walk away - leaving your broker with the problem of where the trade ends up... Yes, you do "get the premium" when you sell it. But your broker also places a negative collateral against your account at the same time. It's just like when an insurance company sells you a policy: yes, theoretically they have your money - but because the time hasn't yet passed, they haven't earned it out (and why they refund the unused portion when you cancel part-way through.) Neither has your short option, for the same reason. You can see that in your P&L: even though you've technically received the premium, the P&L is zero, or (quite likely) some small negative amount at the time of entry. In short, you need to wait until you've earned out that premium before you bank it. P.S.: I run a wheel trading list on Telegram, so if you have any questions, feel free to reach out. It's not quite the trivially-simple way to make money that people make it out to be.