Wheel Options Strategy – Trades In Trouble

Trades In trouble? What am I doing with my current positions? What’s going on with AA, CWH, and RIDE? Let’s get started and talk about it.

Getting Assigned With AA

Last week I talked about, in a previous Coffee with Markus episode, that I had my portfolio loaded with several positions. I have sold puts on AA, for example, at a strike price of 35. And at expiration on June 18th, 2021, they were trading at $32.

So this means I got assigned at $35 here in AA. Now let me show you exactly what I did as soon as I knew that I got assigned. For AA, I got assigned here with 2,900 shares at $35.

Trades In Trouble

Now they are trading below this. On the shares right now I am losing around approximately $6,000.

The account that I’m trading here is a $250,000 cash account, so this gives me $500,000 in buying power. When I see that it’s down $6,000, that’s not concerning me. Here is what I did.

I was looking at what calls I could sell, and as you know, I’m using the PowerX Optimizer. With the PowerX Optimizer, I do have the calculator that I use to decide of what exactly I’m I doing here with AA.

Trades In Trouble

With AA, I saw that I could sell calls with the strike price of 35 and I was able to get 21 cents. This is $609 that I will make on AA this week no matter what the stock does because I sold calls.

AA

Now, here’s the deal. Let’s go back to AA and go to a weekly chart. If AA stays below $35 by expiration I can sell more calls, and in addition to the $608 that I’ve already collected right now, I can collect more premium.

If it goes above $35, this means that my shares are getting called away. In this case, I make no money on the shares. I won’t own the shares, but I’ll keep the $608 in profit.

If you are new to The Wheel Strategy, here is a LINK to a playlist containing a series of videos I did on the topic.

Getting Assigned With CWH

Let’s take a look at another stock that I got assigned on June 18, 2021, and this is CWH. Earlier that week I sold the put for 37.50, and on that Friday I believe they closed around $37.

So I got assigned, and I am now the proud owner of 2,700 shares on CWH. Now here is what I did.

Trades In Trouble

Again, I’m plugging everything into my calculator to see how much money I can make. This morning I found that I can actually sell a call with a strike price that is higher than my assigned price at 39.

CWH

So I’m selling it at a price of 39. Note, I receive the premium no matter what, and I keep the premium. But if the stock price stays below $39 I can keep selling premium, which I love. If the stock price moves above $39, my shares get called away.

In this case I would make $150 per option that I sold. I sold 27 of those so it’s a pretty, pretty good premium that I would receive there.

Trades In Trouble

Now let’s take a look at the PowerX Optimizer to see exactly how much I already received in premium. No matter what the stock price does, I already received $2,160 in premium. Can’t complain about this, I’m loving this.

Trades In Trouble

Now, if the stock moves above $39, this is my strike price here, I will make an additional $4,050 on the stock. This means that my total profit if it goes above $39 will be $6,210. Hey, I’m loving this one.

What Is Happening With JWN?

Let’s see what else has been happening. I got assigned on JWN, Nordstrom. On Nordström, I sold it with a strike price of 32.50 and it closed at around $32 on June 18th. So I got assigned and I currently own 3,100 shares.

Trades In Trouble

Here’s what I did. Again, I plugged this into the calculator, and after I did this is where I saw I cannot only sell the 32.50 strike price, I can actually sell the 33.50.

This means that I’m receiving $1,178 in premium, and if Nordström goes above thirty-three fifty by Friday, then I make an additional $3,100 on the stock. That brings my total to $4,284. Not bad at all.

I Also Got Assigned With PENN

What other stocks have I been assigned? I got assigned on PENN. Here’s the deal. If you’re trading The Wheel Strategy and you’re not saying, “Yippie Yi Yay I got assigned,” you did it wrong, by all means.

Anyhow. with PENN, I got assigned at a strike price of 75. It closed below $75 on June 18th. Going to the calculator, I was looking at what I can do with PENN here.

Trades In Trouble

I got assigned at 73.5, 1,300 shares, and I sold the 76 strike price for $1.10. This gives me $1,430 in premium. Now, if PENN moves above $76 by expiration, I’ll make an additional $3,250 on the stock. I’m loving this.

What’s Happening With The Rest Of My Positions?

There are two other trades in my account where right now I own the shares, but I cannot get enough premium. These are LVS and RIDE.

For LVS I own 1,700 shares. On RIDE I own 10,000. We have been talking about RIDE a lot, and I just want to wait to see if they can pop higher, because then I’ll sell a few more calls.

Right now it looks like a scary big unrealized loss, but trust me, everything is under control. I know what I’m doing here, and looking at RIDE today, it was a little bit all over the place.

RIDE

I mean, earlier I was looking at a five-minute chart and I thought, oh my gosh, what is happening here? We opened at around $10.40, went all the way down to $9.90, then went all the way up to $10.65, and right now we are trading at $10.09. So we will see what is happening here.

What Will I Make This Week?

Let’s tally up what I will make guaranteed this week, and what could be the best-case scenario.

We have AA, CWH, JWN, LVS, PENN, and I also have LVS and RIDE in my account.

With AA, I’m guaranteed to make $580, and this is also the best-case scenario. So if AA is closing above $35 I’m making $580. This is my best and worst-case scenario.

Now let’s see what happens here with CWH. I make a guaranteed $2,160. In the best-case scenario, I make $6,210.

JWN I make a guaranteed $1,178, and in the best-case scenario I make $4,278.

LVS, I haven’t been able to sell anything just yet, so I might not be able to sell calls here, and that is okay. I would not make anything there.

With PENN, I’m guaranteed $1,430. In a best-case scenario, $4,680.

RIDE, right now still nothing.

This is where we stand overall. In the worst-case scenario this week I’ll make $5,348 total. Best case scenario, and this means that the stocks are rallying and going above my strike price, I’ll make $15,748.

Summary

Last week some of you said, “Oh my gosh, what do you do if you get assigned on all this?” Well, here’s what I do. I say “Yippie Yi Yay!”

I mean, look at this. $5,348 is already guaranteed, nobody can take this away from me. This is going to happen on Friday when all the options expire. This is the money that will be deposited into my account.

And hey, if everything goes according to my plan, I’m looking at over $15,000 for the week. Not bad, huh?

You see, this is why people always ask if I’m worried that I’m not making any money on LVS or RIDE. You know what? No, I’m not too concerned. I mean, if these guys are giving me some more money this week, this is fine. Looking at the worst-case scenario here, this is not bad at all.

The reason why I’m doing this is, first of all, to educate you. For example, on what meme stocks are, because everybody’s talking about it and some people know what it is, others do not.

But then also to show you my current trades. My goal is to prove to you that it is possible to make money with trading, and that it’s possible to make SRC profits: systematic, repeatable, and consistent.

You don’t have to go crazy stocks like AMC or Clover, or try to quadruple your account. You can see that fast and steady wins the race.

Thus far in realized profits I crossed the $100,000 mark, and this is on $250,000 cash. That’s not bad at all. Again, this is a margin account. So on this margin account, I’m getting $500,000 in buying power.

But hey, that is a pretty darn good return, at least this is what I believe. And this week I will add another, what, $5,300 or $15,000? I’m not complaining at all.

Read Next: Wheel Strategy: Stocks Are Falling More Than 6%! What Now?



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