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Ford Week 6 - Trading the Wheel Strategy

Kevin Hamilton

Earlier in the week I did close the call options because they were at the 13.35 strike after the special dividend. So today we sell one call option and begin scaling back into full position of 4 call options on our 400 shares.

The only thing that I'll touch on here is we like to keep that percent return around 1 to 3%. Over 1% we are getting paid appropriately to sell the call options. Something over 3% though is probably bringing too much volatility for the wheel strategy.

For the wheel strategy to be maximized and really perform well, we want to choose good stocks that have a mid range of volatility. A really easy way to do that is to not worry about IV. So a really easy to remember rule of thumb, 1-3% is great on a monthly 30/35 day option when you are trading the wheel strategy.

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