Why The Wheel Strategy Is Now My Slow And Winning Tortoise

You may have heard of the tortoise and the hare story. So, the hare challenges the tortoise to a race and was sprinting far ahead when the race started. He got complacent and decided to take a nap. The slow and steady tortoise eventually caught up and won the race.

I started my options trading journey a year ago in late Feb 2021 and have only used 2 strategies since then, the Wheel Strategy and the LEAPS Strategy.

Back in 2021, I wasn’t really too happy to use the Wheel Strategy because I think the returns are too low for the capital that I have invested.

And when I was making crazy returns in a short period using the LEAPS Strategy, I almost wanted to abandon the Wheel Strategy.

You can refer to these threads on the insane returns that I have generated from the LEAPS strategy in 2021:
Thank You Tesla & Elon Musk For The 470% Profits
How LEAPS Options Trading Strategy Gave Me Insane Returns In The Last 4 Months
The Power Of LEAPS: Tesla LEAPS Is Up 340% In Just 18 Days

More than 80% of the 200k profits that I have made in 2021 came from using the LEAPS Strategy.

However, all good things must come to an end and without the Wheel Strategy backing me up in 2022, I probably would be having almost zero returns every month in 2022.

The stock market, especially the Nasdaq where I am heavily invested, went through a huge correction in the last 4 months and many stocks have fallen to their pre-pandemic prices.

That meant that most (if not all) of my LEAPS positions are stuck and losing value by the day. That is the risk of buying LEAPS CALL or being an options contract buyer, where time is always working against you with each passing day.

As the duration of the contract decreases by the day, the premium decreases as well. The only way to reverse this and still be profitable is for the stock price to rise.

I am glad that I reacted fast enough and started reducing my allocation in LEAPS Portfolio and shifting them to the Wheel Portfolio, which I have outlined my Year 2022 strategy in this post:
My Trading Strategies For 2022 | How Will I Trade For Monthly Income?

It is because of my Wheel Portfolio that I am still able to generate returns in the first 4 months of 2022, as seen from the below Profit/ Loss table:

I also came out with 3 strategies on how to better run the Wheel to generate more returns by rolling the contracts at different market conditions, as compared to just waiting for the contract to run its course and expire worthless.

When the market is falling, I choose to roll my sell CALL option contract:
Why I Choose To Roll My CALL Option Contract When Share Price Falls

When the market is rising, I choose to roll my sell PUT option contract:
Why I Choose To Roll My PUT Option Contract When Share Price Rises

Recently, I also came out with a new strategy of getting more out of selling covered CALL and also being able to sell at the strike price that I desire, thus achieving a win-win situation. I explain more in this post:
I Discovered A Way To Generate Higher Returns From Selling Covered CALL For Low IV Stocks Like Apple

Moving forward, I hope to leverage on the Wheel strategies that I have shared above to keep generating consistent monthly income that can help me achieve financial freedom, just as how the slow and steady tortoise will eventually win the race.

*** FREE RESOURCES ***
Keen to learn about options trading but do not wish to pay for expensive courses, this newbie guide will help gain the knowledge and fundamentals to understand options better. And it’s totally free!
The Newbie’s Guide To Options Trading

The LEAPS Strategy has helped me make more than USD120,000 in 2021. Here’s all you need to know about this strategy that can help you increase your wealth exponentially:
The Ultimate LEAPS Options Thread

Looking for ideas on what stocks to invest in or which stocks to trade? You can take reference from what I have been buying or selling. I try to update them as soon as I can in this section, as well as share my thoughts on executing these trades:
MY TRADES

If the bear market in 2022 is making feel depressed as your stocks come tumbling down, read this article to find out how you can use options trading to help you claw back some of your losses as you await market recovery:
How I Do Earn Even When The Stock Market Is Bearish?

Also, check out my trading strategies in different market conditions, whether it is bullish, bearish or volatile:
How Not To Lose Money In Trading? | My Trading Strategies For Bullish, Bearish And Volatile Market

I watched tons of videos on YouTube since 2020 and if you are wondering if there are any useful channels that you can subscribe to for learning market trends, TA, FA, check out this compilation here:
My Secret Weapons For Options Trading: I Watch These YouTube Financial Channels Every Day

I concluded my first year of options trading with more than USD160k of gain, see how I do it and the capital I use for every month to give you a sensing of the percentage yield I get out of my gains:
1st Year Options Trading Recap: The Journey Towards SGD$217,509 Profits In 2021

This blog is as authentic and as transparent as I can share, I do not just show the wins and hide the loss. I have made some very bad decisions in the first 8 years of investing and paid a huge price for them. Here is the loss I have accumulated during these years. I hope you learn some lessons from my mistakes.
I Cut $135,715 Worth Of Losses In The Last 1.5 Months

Want to learn more about Technical Analysis (TA) but find it difficult to grasp the concepts? This article brings you TA at a glance, and helps you understand key terminologies, indicators, and techniques used in TA to equip you with the knowledge that can empower you in your investing/ trading journey.
The Newbie Guide To Technical Analysis (TA)

Excited to start your trading journey or perhaps try out with a paper trading account to build your confidence in trading? Check out this step-by-step to help you get started:
How To Buy Options on Interactive Brokers (Step-By-Step)

Follow me on your favorite social media platforms, FacebookLinkedIn, or Twitter, to get notified of my latest blog posts. Or join our investing/ trading community at Telegram to exchange ideas or ask questions relating to investing/ trading.

2 thoughts on “Why The Wheel Strategy Is Now My Slow And Winning Tortoise

  1. yep. there are 2 broad classes of option strategies – those that help you get rich and those that help you stay rich. depends on one’s objective. LEAP calls belong to the first category, while wheel is the latter one.

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    1. Hi Raymond, you are absolutely spot on! If the market stays bullish in 2021, then there is no strategy that is more powerful than the LEAPS. However, it is times like this we need to rely on the slow and steady to help us win the race, ha 🙂

      Like

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