Stock Options – Selling

Option Selling

After the unhinged bull run that was the 2020-2021 market, the goal going forward with options became more about preservation and less about aggressive growth. While I still actively day trade, most of my capital goes towards accepting cash secured put obligations, if assigned this is subsequently followed by selling covered calls on the same ticker. A strategy otherwise known as “the wheel” Through this I have secured an average weekly return of approximately 0.37%, over the last 6 quarters.

Watchlist

Every week I pick a new batch of stocks to sell premium on. This is based on three things, downside risk, premium payout, and chart levels. The only way the wheel fails is, assignment on a stock followed by a d sharp enough drawdown to which makes selling premium at or above the strike price negligible. Any stock on my “golden list”; a stock highlighted in yellow, is a stock I believe presents minimal downside risk and realistically I would buy at any price and be comfortable holding for decades. The caveat for these tickers, is they generally pay less premium, therefore I use a combination of closer to at the money strikes and more capital to make up for it.

Premium payout and chart levels go hand in hand. The golden rule for anything with an above “medium” profile risk is only sell premium for strikes that; at a chart level demonstrate strong support and demand zones. These levels are carefully selected by myself and a few different analysts, who I have been working with for over 2 years. Anything with an above “high” risk profile is to be treated lightly, an absolute maximum of 15% of capital is to be allocated to these names at a time, and only at critical levels.

Below is the watchlist I use. with the (approximate) strikes I am watching

to see earlier weeks check out the archive