Every Monday morning at 7:15 a.m. Pacific time, in my live streams, I am fully revealing my proprietary Safe Wheel Strategy for free. Using my 28 years experience, I’ve developed The Safe Wheel Strategy to cancel out the risks associated with the normal wheel strategy. I also designed the system to only need my attention once a week on Mondays, and on rare occasions Fridays. And this is what I call a Level 5 Strategy.
Now, what you see on the screen is The Trader Matrix. I developed this to make it easy to distinguish between trading levels. After taking over 30 online stock and options courses, I’ve found that I’m the only level five trader that is not using portfolio margin. Portfolio margin is used for large accounts over $100,000.
Now after 28 years, I’ve only found one edge in trading and that is selling option premium. Level 5 Trade Systems are the only way to sell option premium efficiently and safely. For a better explanation of the five trading levels, see the link in the description for the video called “The Five Stages of a Trader”.
Okay, let’s get started. First, I want to do a sound check. Can you guys hear me? Please post in the comments yes or no. Okay. Yes. Okay. Good.
All right, let’s get started here. First thing, I always want you guys to do is post any questions you might have. If you post those right now then I’ll have a chance to go over those during the live stream; I won’t miss them.
Okay, first let’s talk about The Earnings Edge. What happened last week? As you can see my Earnings Edge account started with $5,000. Now, it’s up to $6,660. Now, you might have noticed that is the same as the week before. The same balance because I did not take a trade last week. There were plenty of stocks that had earnings but none of them fit through my filter. So if nothing fits through the filter, I don’t want to place a trade. I’m not just going to place a trade because I got to place a trade that week. I’m going to make sure, or at least, have a high probability of that trade being successful and I didn’t see that last week. So there were no trades last week.
All right, next item. Let’s get into The Safe Wheel. That would be this account here. What happened last week? So last week I sold the $24.50 put and Macy’s went under 24.50 last Friday and I was assigned. So I own 100 shares. So what’s next in this wheel, the wheel strategy, is you sell a covered call. So you want to collect more premium. You don’t do anything with the hedge. So let’s take a look at selling the covered call and make sure I’m on Macy’s here.
I want to sell short-term premium so the ones that are four days old, the ones that expire this Friday. Those are the calls that I’m going to sell or the cover call I’m going to sell. And remember, I got in at 24.50 so I want to go at least at the 24.50 strike, but I want to get at least about 25 cents. So I can get going to 25.50. I can get $0.30 – $0.38 so I’m gonna go there.
This one’s a little bit low, the 26. I could technically sell that. That’s probably going to get me around that $0.25 but I’m going to take a little more premium here. But I like to get as far away as possible because then when I get called away there’s more profit. So I’m going to sell this covered call here. I’m going to do one of those because that’s my sizing. Remember, I’ve started with a $5,000 account. So mid price here 0.36. I’ll try to get 0.37.
Okay, that filled right away. Now, I need to protect my hedge and the way I do that is buy something around $5 – $6. I’ll see if I can get this one for $6 here. It’s 27.50. I want to get as close as I can or as low as I can. And I’ll pay $6 but I won’t pay $7. This will protect my hedge if it fills.
Okay, so that’s not gonna fill. So I’m gonna go to the strike price. The strike that’s a little bit higher. This one here. I’ll try to get $0.04. I’ll try to pay $4 but it might not. So just get $5. This should fill. Yeah, okay.
So now we have our wheel strategy. I don’t even come in and take a look at this until Monday mornings. Now, I do have an alarm set for the end of the trading day on Friday so I can go in and take a look at Macy’s. And the reason why I look at it on Friday just for a minute, not even a minute for 10 seconds, is to make sure that it’s not above this strike that I bought. So this long one, this 28 call, I’m going to go in on Friday. Right at the end and see if Macy’s is above $28. If it’s above $28, I’m going to sell this call. If not, I’ll just leave it alone and I come in on Mondays.
When I come in on Mondays, I don’t even know if I’ve been assigned. I don’t pay attention to it. i just come in like I just did right now, you know. I’ll look at it just a little bit before the live stream, kind of know what’s going on, and that’s what I do. I don’t really pay much attention to it.
Okay another thing is The Safe Wheel guidelines and flowcharts. So I put together guidelines and flowcharts so it would help you if you’re interested in The Safe Wheel, and I still have those at a substantial discount and they’re available. There’s a link in the description for that.
Now, let me talk about the percent returns on the Earnings Edge. We’re up about $1,660 this year. Up about 33% on the year. And then on the Safe Wheel, up about $874. That’s approximately 17%. So I’m up 17% on The Safe Wheel.
One thing I want to look at real quick is the market. How has the market been doing? Let’s go into the market. So we ended here, yeah, and we’re down here. So you can see, you look right about there, you’ll see that the market’s down around 13%. So with the market down 13% percent, we’re up 33%, up 17%. Pretty good. I like both of these strategies. Sometimes it’s better than just going long the market as you can see.
All right, so let’s get into questions. Let’s see if there’s any questions.
All right, [Sharon Narbona]: So how do you use the hedge in case of a high fall in the stock price?
So if the stock price goes down significantly, the hedge will actually make more money than what the stock is actually losing in value because you’ll own the shares. So say I own 100 shares. Well, I have three long puts so that’s equivalent to 300 long shares. So that’s how that hedge covers. Covers for a loss or wouldn’t be a loss. Hedges to the downside.
[Wolf]: It appears The Safe Wheel works particularly well when the underlying stock moves sideways or downwards. Would The Safe Wheel also work when the underlying gradually and consistently grinds higher.
Yeah, so if it grinds higher it will eventually work because the stock just doesn’t continue to just grind higher forever but you could have some drawdowns. Like I said, my back tests show about a 10% return over annualized,s o every year. So we’re vastly outperforming because you can see that Macy’s is just trending sideways. So that’s really good and, you know. In my back test, you’ve got 2017 and 2019 where those particular years the market just kind of grinded higher, higher, higher, higher and so those are, you know, this Safe Wheel still made money in those environments, but just not as much.
John [Macdonald]: Why do you think the actual Safe Wheel trading is so much more profitable than the backtests?
It’s because of the volatility. It’s also because of the sideways actions that we’re getting with Macy’s. I mean, take a look at this. I mean, look at how much sideways action we’re getting. That makes this system really profitable.
John [Macdonald]: Or are you making better decisions in real-time?
No, I’m not making any different decisions versus my back-tests. I’m making the exact same decisions I made during the back-tests. They’re black and white rules.
John [Macdonald]: Please show analysis tab.
Okay, sure. The analyze tab. Make sure this is properly checked off, yeah. So you have your make sure this is done right. We got the stock and the three–and we’re over here so you can see–the T+0 line. It’s nice. Very nice Gamma. That’s negative Gamma. It’s kind of going down a little bit. So you can see that if Macy’s goes higher, it’s gonna lose a little bit in value, but it still turns way back up here. So that’s a nice T+0 line there.
Okay, Eric [Wheeler]: Why do you bother with buying a call if you’re selling a covered call and you’re assigned.
Even if I sell the cover call and I’m assigned… Let’s say that Macy’s goes to 40 or something crazy happens. I’m protecting the three put hedges. Let’s see where those are. These three puts right here, they’re currently worth 1.96. They’ll go to, I mean, if Macy’s goes to like $35 or $40, these things will be like, I don’t know, $0.20. I mean, I’ll lose all of those, all that. So I have this little call right here that’ll cover that loss if that happens. So that way everything is hedged. Even my hedge is hedged, and that’s what I’m protecting my hedge.
John [Vizcarondo]: You don’t need to answer this today, is $PENN a good stock candidate for your criteria?
I’m just going to say probably not. Just by not looking at… What I’m thinking about $PENN, I don’t really recognize it. And if I don’t recognize it, it probably doesn’t have very liquid underlying; a very liquid option. So look at the difference between the bid-ask spread right here. $0.11 and $0.13; $0.41 and $0.46; $0.60 and $0.67. These are tight. If you look at $PENN, you’re probably going to get really wide bid-ask spreads. Let’s take a look.
Oh, wow, okay. I don’t know. I had never even heard of this stock; didn’t know it was this liquid. This is fairly liquid. Yeah, but no. I wouldn’t. I want to do something… Yeah, that might work. I’d have to take a look at it. It’s a possibility. It is a possibility. Yeah, but you know $0.91 and $1.10. So you’re what, a $0.30 spread when you started getting around a dollar.
Let’s look at Macy’s. When you’re around a dollar, $1.12 and $1.21. An $0.08 spread so you can see that this… I would stick with more liquid–I would stay away from $PENN because of that reason.
John [Vizcarondo]: Earnings Edge questions. A couple weeks ago you made profit, but some subscribers didn’t. Was it because of a delay in getting alerts.
No, it wasn’t a delay because everybody had the alert I’d say within 10 or 20 seconds after I was filled. it just happened that I got filled and the other half–not everybody lost. Half the subscribers lost. The other half made some money, and they kind of closed their positions earlier. But for some reason, I got to fill and other people didn’t get filled so it really didn’t have anything to do with the delay in the alert. It had to do with the fills.
[Jerry]: Does the course, guidelines, and flowchart teach how to implement this strategy on your own?
No, I mean, the best way to learn how to implement the strategy is to watch my live streams. Like you are now. Or you can go back into the history of the live streams and you can see everything. I explain everything as best I can, but then there’s always further questions or further detailed questions. And that’s what the guidelines in the flowchart talk about. They talk about the scenarios that I don’t come across in the live stream, because I don’t come across every scenario during the live stream. And that’s what those things cover; all the other aspects; the flowchart does.
[Sharon Narbona]: It’s a beautiful strategy.
Yeah, I think so.
[Ana]: Would you trade The Safe Wheel with a larger account, let’s say $50,000.
Yes, I would. Yes, I would. Would I trade The Earnings Edge with a larger account? No, I would not. Not unless I grew the account to a larger account from the Earnings Edge. Then yes, I would continue to trade that large account. But with The Safe Wheel, I would scale it up.
[vfx traders]: How am I sending out alerts for the Earnings Edge?
I use Discord. And within Discord, there are certain channels or certain areas that you can go to that are only approved. So I would approve you to get into a certain channel. And then within Discord, you can tell it to send an alert to you. Like, whenever I post something in a certain channel, it’ll send a little alert to you so you know when it happens.
Don [F]: So we know that real P&L does good. Subscribers, what percent of profits are you making? And over what period of time?
Yeah, I would be welcome for them to answer any of those questions. You’ll see if you get into The Earnings Edge, we have a separate chat area and you can see what everybody’s talking about. Once you get in, you’ll be able to get everybody else’s opinion of what’s going on in there and it’s pretty much all good positive stuff.
[Eduardo C]: Would you mind creating a playlist with all Safe Wheel videos?
That’s yeah I can do that. I don’t know how well I’m going to continue to keep it up. I might forget to keep it going, but I can definitely do that. Let me write that down. Give me a second. Safe Wheel playlist.
Victor: How do you hedge the hedge of the hedge?
Okay, I don’t think I need to hedge the hedge of the hedge.
All right, Jam: Can you buy a protective put for less days if the Theta is the same?
Well, you know, it’s all relative. So the short-term Theta, or volatility, is going to be related to the longer-term Theta, or volatility. They kind of link together. So I like the 150 days and that’s really what back-tested well. If you go with 100 days, it might look really good when you first get in, but maybe the volatility drops or something changes. And now those 100 day ones, are the Theta increases significantly? So I would say 150 days. I hope that answered your question.
Don [F]: Do you have to have at least $25,000 in order to execute these trades.
So I started this account with $5,000 with a margin account. That’s what I would recommend that you would do. Also, if you wanted to follow me $5,000 would be the minimum. That is what I would recommend. And I would actually recommend even if you had a $500,000 or whatever, that you do start with $5,000 because you want to learn the strategy first before you size it up.
[SuchBaklava]: What are your thoughts about David Jaffe and how do you differ from David in terms of trading?
I think David Jaffe is extremely smart. He is very… He cares about his students. He’s ethical. He’s honest. How do we differ? Well, he he does more of… He sells premium, but there’s some risk there. So, you know, if I were to trade his system, I would only take maybe 10% to 20% of what my account was worth and trade it. I would keep my size really low because he’ll make good high returns, but then sometimes there’s some risk in there. So keep the size super low. That’s what I would do with him.
And how are they different? How are we different? My trades are always hedged and I don’t know if all his trades are always hedged. Sometimes his trades have stops, I should call them, or hedges but not all the time.
Okay, any other questions? All right, I don’t see any other questions. One thing I always like to say: if the P&L is not real, what else are they trying to conceal?
LINKS MENTIONED:
Link to Safe Wheel Guidelines & Flow Chart
Link to my Earnings Edge Alert Service
Link to My Safe Wheel Back Tests GO TO
Link to The Trader Matrix Video
Creating Wealth If I Had To Start Over
Link to Premier Level 5 Trade Alerts
