Good morning and welcome to my real time options trading. Where I trade a real account with real money right in front of you. Now, I’m totally transparent as I share my account value live on screen. And I’ve been trading options online for 28 years now. And I’m here to share how it’s possible to trade options with less risk and how you can even follow my trades if you choose to do so. I must say that trading is risky and it is possible to lose money following my trades.
My purpose is to help people learn how to trade a proprietary trade I developed called The Safe Wheel Strategy. The wheel strategy, as it’s known today, is a popular strategy, but it comes with major risks and I’m here to help people learn a wheel strategy that does not carry all the normal risks. Now, I’ve seen people follow the old-school wheel strategy that many Youtubers tout only to end up becoming frustrated and lose money. If you’re interested in a conservative effective approach to trading options for free, you’re in the right place. If you’re interested in the back-test results of the proprietary Safe Wheel Strategy that I developed, I’ve made a video on that and I left a link in the description.
Okay, there we go. So what happened over the weekend, or on Friday? Because remember I sold a weekly option on Friday on Macy’s, a put. I showed the 27 put and we can see here that I got assigned, because you could see the market’s down pretty good today. Whoo.
$SPY is down 8.5. So we’re down pretty good today. Well, Macy’s is also down below my strike of $27, so I did get assigned. But remember, I have my put-hedge. Remember how I bought those three put- hedges? And those are actually, you know, helping me out quite a bit. And we can see here that the account is actually up about $80. So basically we’re profitable on this particular trade so far.
So what can I do now since I own these shares? I can look to sell a call. I want to stay in the weeklies. But the 27 call would be the, you know, the… If I sold the 26.50 call and then I got called out, I would lose money right, because I bought the stock at 27. So I need 27 or higher. A 27 call or higher.
So when I look at the 27 call itself, I think well maybe I’ll sell this one. But I like to get 1% of the price of the underlying. So the prices underline right now is $25. So I want to get at least $0.25. So I can’t even get 25 cents here. You see that? If I could get $0.25 or more, I would sell this call and keep the wheel going. But the fact that I cannot, I’m kind of losing. I’m too far away. And the fact that I’m up, I’m going to close the whole position out and just start over.
Let me get to the chat, make sure there’s–if there’s anyone in the chat that has any questions or anything; make sure that you guys can all hear me okay.
So I’m going to go ahead and close everything out here. So, I’m going to take the… I’m going to create a closing order here. What are we trading, at 25. Try to get a little more.
Okay, got that filled. Now, I want to try to see what I can get for this put-hedge. You can see the mid-price 260. I’m going to get as high as I can; just go 263 and just kind of work it down. Okay, sometimes you don’t get mid-price. Now sometimes you’re chasing like I am right now. Okay.
Okay, so we’re totally clean. Started with a $5,000 account. Our NetLiq. was $5,075. We’re actually ahead. And you can see this overall P&L. Don’t pay attention to that, I’ll get into that later. So $75 but I’m gonna stick with Macy’s. I could change what stock I’m gonna use right now. I mean, I’m fresh and clean, ready to go but the first thing I’m gonna do is I’m gonna buy a put-hedge.
Okay so, first thing I’m going to do is buy my hedge. So I want to go somewhere around 200 days; 130 to 221. Now, what I’m going to do is, I’m going to take the price which is $25 and I’m going to multiply it times 80%, that gives me $20. So that’s the strike I’m going to choose.
So I’m going to go with a $20 strike. I could go 220 days out on the $20. I don’t like to pay $2. I think that’s a little much. So I’ll go to the 130 days and go to $20. I’m gonna buy three of these. So remember I’m buying three because that’s going to protect one position. And I have one position for each $5,000. So I’m totally covered as far as cash secured.
Okay, so mid-price 1.44. I want to pay as little as possible. I’ll try 1.41. Okay, put on, let’s see, the price is up to 1.47 now; 1.48 okay. All right, so we have our put-hedge on.
Now, we want to go ahead and open up our wheel. And we’re going to do it on a weekly one that’s going to expire on Friday. We’re going to sell a put and again you know trading around 25, so we want to get around $0.25. So this $23 here probably not quite enough; probably go to the $23.50; could have went this way. I’m going to sell one of these. It’s cash to secure put. I’m going to bring in some premium here, say .33. I’m trying to get as much as I can.
Telling me I have a buying power issue here. What’s going on? That doesn’t make any sense. Let’s see here. I sell this. Oh this account is not margin, and it needs things to settle. And that kind of goes back into my other account that is margin. They only let you have one account that’s margin at TDAmeritrade. I have a portfolio margin account and then I have a regular margin account and I have this account. And it’s not margined.
So like, it’s because the positions hasn’t settled yet. It’s not letting me do this. Let’s see here. Because this is only taking up $2,3000 of buying power, I only have $2,100. Interesting. Okay, well let’s see if I did sell this $23. $2200, it is probably not going to let me do it. So I’m not getting the buying power. So I’m gonna have to uh, this is interesting.
I might have to use my other account for this. I’m gonna have to move my accounts around here. It’s going to reject the order. Let’s see, yeah. I can’t do spreads.
Okay, well this is what happens in live streams. I’m gonna have to come in tomorrow when everything’s settled and come in and do this. So tomorrow at 7:15 a.m. I’m going to do another live stream, because I need to put this position on but we’re still ahead. And I just bought these three here.
There’s gonna be a little bit of risk that I’m gonna hold. So I’m gonna actually exit out of this because I can’t control this. It’s not hedged. It’s not being paid for so I’m gonna get out and then tomorrow I’m gonna reestablish everything.
Okay, these are the kind of things you run into. So I’m going to sell this for more. Okay, so lost $0.03 on that. Okay ,still up. I’m gonna have to come in tomorrow and create the new position.
Are there any questions? I don’t see anything in the chat. Oh sorry, I didn’t see the comments.
Okay, let me start answering some questions here.
Is this “close out” a rule you’ve devised if you can’t get 1%? Basically, yes. That is a rule that I devise if I can’t get 1%. Sometimes I will add to the position if I’m still haven’t… if I’m not profitable, but I was profitable so I decided to close it out.
Why not close it out and try to sell another call or look for a different stock? I did sell it out so I’m a little confused about that, but I like the stock that I have. It’s within the range and it’s got good premium so hopefully I answered that question.
Why not close out? Okay, that was the same question.
You could remove one put? Remove one put. I had a put sold and then it automatically took my put out. So I’m a little confused about that question there. Maye you can rephrase that.
Could you add more capital for cushion? Yeah, I could do that but it looks like because of the way the account is…the way that they give me don’t give me margin. I’m just going to–if I close anything out I’m just going to come in on the next day. if I make any trades, I might have to come in on the next day and just continue to do my live streams like that because I can’t change the account. They’re not going to give me margin because I already have margin on my other two accounts. I might use a different broker; that could be one thing to do. But I really don’t like other brokers. I really like this platform. It’s really smooth. I’m really comfortable with it.
Do you have the rules or steps written out? I have the rules kind of written out. The thing is it’s a little bit subjective. So I don’t look at those rules, because today I could actually sold a call and just done that. It was right on the edge. So, you know, the rules are a little bit subjective.
This is how it happens in real life? Absolutely and that’s why I think people are interested in live streams, but yeah this is real life stuff. And, you know, you can see here when I talk about subscribe to my Earnings Edge and there’s a link in the description. Hopefully, I put a link in that description, I don’t remember if I did or not. But my trading record’s over one. Like I I took a loss on my last trade, down $300, you know, that’s reality. I’m not going to tell you guys something that didn’t happen.
Okay, another question or comment here.
Isn’t subjective what you comment about teachers? Yeah, I mean it’s 90– this thing is 98%, 95% objective, but it’s that 1% subjective part. Because earlier today, if I would have got out of…if I would have came in here at 6:30 a.m. instead of 7:15 a.m., I would have sold a call because Macy’s wasn’t down as far. It was–so I guess, I guess you’re right. I mean, I guess I am being objective because I couldn’t get $0.25 I could only get like $0.22. So that is pretty being, pretty objective. But as far as the rules, I guess I don’t really want to… The rules aren’t exactly 100% defined and part of those rules, that part of my live stream is actually showing you what, how I do it. Rather than just giving it away. So that’s another factor to be honest.
But okay well, I don’t see any more comments or any more questions. So I’m going to be coming in tomorrow to go ahead and open up a new position here with Macy’s. So I look forward to seeing you guys then.
LINKS MENTIONED:
Link to my Earnings Edge Alert Service
Link to My Safe Wheel Back Tests GO TO 6:55
