Results from my first month of "wheeling"
Hey guys,
Just finished my first full month of wheeling, which has just been CSPs up to this point. I learned some lessons early on but feel like I've got a good hang on what's going on.
I built out my model and have gotten some really good use out of it thus far. I am a fairly conservative guy, and my results certainly speak to that.
My framework is as follows:
DTE Window - Target 20-40 days to expiration.
Delta Target - 0.20 to 0.30.
Minimum Return Thresholds: Minimum Trade ROC: 2.0% / Minimum Annualized ROC: 25%
Underlying Quality: Must be a well-established company; No penny stocks; Elevated IV is acceptable only if the underlying is still worthy of ownership.
BTC at 50% profit opened immediately for each new CSP, set GTC.
What I've learned thus far...
Trade ROC doesn't matter quite as much if your capital velocity is high; though that involves a degree of luck that you cannot rely on.
Don't get antsy and buy out early just because you get nervous... I did that with DOCU and missed out big time. Either way, if you don't feel comfortable being assigned at your cost basis then you shouldn't have executed the trade.
The urge to "tinker" is so difficult. I am very ADHD and work in finance, so I get very into models and squeezing out efficiency where I can. This kind of method doesn't work well if you over-engineer everything; just keep it simple and let theta decay and a strong opening position do the rest.
Conclusion:
I can't wait to see how this goes for the foreseeable future and to continue growing my account. I built out a whole policy framework for my trading to keep myself in line and not get out over my skis with "interesting" or highly volatile stocks - I am happy to share that document with anyone else that also wants a conservative strategy like mine. Also, haven't had to CC - as I haven't been assigned yet - so I may have some lessons learned in next month's update with HIMS and SOFI, given my current position with those.