How Much Can You Make Trading The Wheel (Covered Calls & Cash Secured Puts)

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In this video we will be talking about the wheel options strategy which is when you trade covered calls and cash secured puts. I will show you every one of my trades in 2022 to show you how much money you can make doing this options trading strategy.

A covered call is an options strategy in which an investor writes (sells) a call option on a security that they own. The goal is to generate income from the option premium and potentially from capital appreciation if the underlying security's price remains unchanged or rises. If the price of the underlying security falls, the investor may experience a loss due to the decline in the security's price, offset in part by the income received from the option premium.

In a covered call, the investor is "covered" because they own the underlying security and are committed to selling it at the strike price if the option is exercised. This is in contrast to an uncovered call, or "naked" call, in which the investor does not own the underlying security and is exposed to potentially unlimited losses if the price of the security rises significantly.

Covered calls can be an attractive strategy for investors looking to generate income from their portfolio while also potentially participating in some upside potential in the underlying security. However, they also involve risks, including the potential loss of the underlying security if the price falls significantly, and the possibility that the investor may miss out on potential gains if the price of the security rises significantly. As with any investment strategy, it is important to carefully consider the potential risks and rewards before implementing a covered call strategy.

A cash-secured put is an options strategy in which an investor sells a put option and simultaneously sets aside the cash to buy the underlying security if the option is exercised. The goal of the strategy is to generate income from the option premium and potentially from capital appreciation if the underlying security's price remains unchanged or rises. If the price of the underlying security falls, the investor may experience a loss due to the decline in the security's price, offset in part by the income received from the option premium.

In a cash-secured put, the investor is "secured" because they have set aside the cash to buy the underlying security if the option is exercised. This is in contrast to a naked put, in which the investor does not have the cash to buy the underlying security and is exposed to potentially unlimited losses if the price of the security falls significantly.

To implement a cash-secured put strategy, an investor would first sell a put option on a security they are interested in buying. They would then set aside the cash required to buy the security at the strike price of the option if it is exercised. If the price of the underlying security remains above the strike price or rises, the option will expire unexercised and the investor will keep the option premium as profit. If the price of the underlying security falls below the strike price, the option may be exercised and the investor will be required to buy the security at the strike price. However, the investor will also have received the option premium as income, which can offset some of the loss from the decline in the security's price.

Cash-secured puts can be an attractive strategy for investors looking to generate income from their portfolio while also potentially participating in some downside protection or downside potential in the underlying security. However, they also involve risks, including the potential loss of the option premium if the price of the underlying security remains above the strike price, and the possibility that the investor may be required to buy the underlying security at an unfavorable price if the option is exercised. As with any investment strategy, it is important to carefully consider the potential risks and rewards before implementing a cash-secured put strategy.

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