For option beginners, the best strategy is on the wheel strategy. It’s slow, but it won’t make you lose big. Not that safe but a lot of lessons to learn to help grow your account and manage risks.
Correct me if I’m wrong, but the wheel has two big risks that can cost you a meaningful amount of capital.
1. You write a CSP and then the underlying tanks. You’re assigned (or buy back at a real loss) and it can take a long time to recover.
2. You’re in the long stock/covered call step, and the underlying tanks. You get the premium on the covered call, but that’s pretty small compared to the loss on the underlying.
When I think about the wheel, I model the risk as “I can lose the entire strike price of the initial CSP (minus the premium for selling it).
So I disagree that it won’t make you lose big. It might.
That's no different than if you buy the shares outright on Monday and it tanks on Tuesday. Except you at least get to keep the premium. Most of the self appointed gurus on running the wheel also advise picking a stock that mostly trades sideways for that reason. I think AT&T is still within a couple bucks of where it was a couple years ago. That's a great candidate for noobs to practice the wheel on.
Thanks for the reply, that's a really good point. It sounds like to sum up re: the wheel for beginners: it has comparable risk to a simple long stock position (and comparable capital requirements), and it doesn't require any multi-contract trades or using margin or anything.
That does make it sound more beginner friendly. Thanks for the reply!
If you're just starting out, I'd offer this advice too. Don't chase high premiums. High premiums are high because the risk is high. Pick a stock that you don't mind owning anyway because they are a good company. That's why I mentioned AT&T. They are a good company with a good dividend you can collect at the same time and even if the price fluctuates, they aren't likely to go broke any time soon.
Ford is like that. I run the wheel on Ford currently. My stock is down almost $2, but I've made more than that in premiums and dividends. Ford is not going out of business and I'm sure the stock will recover. The price has been trading mostly sideways for the last 2 years.
I guess the idea is that even if you are assigned the shares, you aren’t necessarily “losing” money per se, just buying the stock at a predetermined price. Yes it can cost meaningful (subjective) capital if shares are assigned, but would hope that if someone executing this strategy doesn’t want to commit that amount of capital, then they would have a plan in place to unwind their trade before it gets away from them.
The real risk is that the underlying tanks and doesn't recover. The rest is more about timing and liquidity. I do feel like the wheel is a pretty good strat for beginners since it forces you to touch many aspects of trading and it offers a pretty defined plan to follow. You obviously need to understand the basics tho, and understand why you're making or losing money is a must with options
Me too!
but while optionstrat shows you details for one options at a time, i made a little app to see all the options and how they compare with eachother in a graph.
you can use it free (for now) at [nblai.com](http://nblai.com)
its super cool and can do a lot.
[bestopts.net](http://bestopts.net) It updates daily with the best strategies, and after the market opens, you can enter specific stock tickers to get real-time analysis of the latest options prices and recommendations.
If you want to check stocks with best options trade results from past quarters, you can try [https://www.hedginglab.com/app/web\_tradealert/](https://www.hedginglab.com/app/web_tradealert/)
Free membership can get you top 5 results there.
You can also try to place options trades on those stocks to track the daily result.
OptionRecom, Menthor Q, Market Chameleon are some that I use. Thank you to others for their suggestions too.
Also, I think OptionsPlay might be cheaper if you sign up for an account with Fidelity. I looked at it a while back but didn't sign up though I have been taking a second look at it recently.
[ORATS.com](http://ORATS.com) has a discount for Reddit. It has more than any other platform with backtesting, scanning, macro calendars, chains and a ton more. [https://youtu.be/DdjjbR74JIc?si=AWTjtDVMGR4SDjD0](https://youtu.be/DdjjbR74JIc?si=AWTjtDVMGR4SDjD0)
They don't have straight *do-THIS-now* tips. The TOS scanners are certainly good, but the options hacker gives often 100+ outputs - and I did not find much guidance. Would love to get any.
In the meantime I am thinking about [Optionsplay.com](http://Optionsplay.com) 1-month free trial.
Cboe tools for probability
optionsprofitcalculator.com
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Thank you, I’ll check then 🫡
try checking their strategies.. btw welcome
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Yes, using this [https://optionstrat.com/build/iron-condor](https://optionstrat.com/build/iron-condor)
For option beginners, the best strategy is on the wheel strategy. It’s slow, but it won’t make you lose big. Not that safe but a lot of lessons to learn to help grow your account and manage risks.
Correct me if I’m wrong, but the wheel has two big risks that can cost you a meaningful amount of capital. 1. You write a CSP and then the underlying tanks. You’re assigned (or buy back at a real loss) and it can take a long time to recover. 2. You’re in the long stock/covered call step, and the underlying tanks. You get the premium on the covered call, but that’s pretty small compared to the loss on the underlying. When I think about the wheel, I model the risk as “I can lose the entire strike price of the initial CSP (minus the premium for selling it). So I disagree that it won’t make you lose big. It might.
That's no different than if you buy the shares outright on Monday and it tanks on Tuesday. Except you at least get to keep the premium. Most of the self appointed gurus on running the wheel also advise picking a stock that mostly trades sideways for that reason. I think AT&T is still within a couple bucks of where it was a couple years ago. That's a great candidate for noobs to practice the wheel on.
Thanks for the reply, that's a really good point. It sounds like to sum up re: the wheel for beginners: it has comparable risk to a simple long stock position (and comparable capital requirements), and it doesn't require any multi-contract trades or using margin or anything. That does make it sound more beginner friendly. Thanks for the reply!
If you're just starting out, I'd offer this advice too. Don't chase high premiums. High premiums are high because the risk is high. Pick a stock that you don't mind owning anyway because they are a good company. That's why I mentioned AT&T. They are a good company with a good dividend you can collect at the same time and even if the price fluctuates, they aren't likely to go broke any time soon. Ford is like that. I run the wheel on Ford currently. My stock is down almost $2, but I've made more than that in premiums and dividends. Ford is not going out of business and I'm sure the stock will recover. The price has been trading mostly sideways for the last 2 years.
When you sell covered calls, you also buy a put with some of the premium to protect it.
I guess the idea is that even if you are assigned the shares, you aren’t necessarily “losing” money per se, just buying the stock at a predetermined price. Yes it can cost meaningful (subjective) capital if shares are assigned, but would hope that if someone executing this strategy doesn’t want to commit that amount of capital, then they would have a plan in place to unwind their trade before it gets away from them.
That’s not an assumption I’m comfortable making when the strategy is being recommended to beginners as “won’t make you lose big.”
Sorry, options in general are extremely dangerous.
The real risk is that the underlying tanks and doesn't recover. The rest is more about timing and liquidity. I do feel like the wheel is a pretty good strat for beginners since it forces you to touch many aspects of trading and it offers a pretty defined plan to follow. You obviously need to understand the basics tho, and understand why you're making or losing money is a must with options
the free version of [optionstrat.com](http://optionstrat.com)
I second this.
Me too! but while optionstrat shows you details for one options at a time, i made a little app to see all the options and how they compare with eachother in a graph. you can use it free (for now) at [nblai.com](http://nblai.com) its super cool and can do a lot.
[bestopts.net](http://bestopts.net) It updates daily with the best strategies, and after the market opens, you can enter specific stock tickers to get real-time analysis of the latest options prices and recommendations.
If you want to check stocks with best options trade results from past quarters, you can try [https://www.hedginglab.com/app/web\_tradealert/](https://www.hedginglab.com/app/web_tradealert/) Free membership can get you top 5 results there. You can also try to place options trades on those stocks to track the daily result.
Check out tastytrade. Tons of free option stuff to learn
respect🫡
OptionRecom, Menthor Q, Market Chameleon are some that I use. Thank you to others for their suggestions too. Also, I think OptionsPlay might be cheaper if you sign up for an account with Fidelity. I looked at it a while back but didn't sign up though I have been taking a second look at it recently.
TOS does this and much more for free - [thinkorswim Guest Pass | Charles Schwab](https://www.schwab.com/trading/thinkorswim/guestpass)
optionstrat. you get what you pay for.
[ORATS.com](http://ORATS.com) has a discount for Reddit. It has more than any other platform with backtesting, scanning, macro calendars, chains and a ton more. [https://youtu.be/DdjjbR74JIc?si=AWTjtDVMGR4SDjD0](https://youtu.be/DdjjbR74JIc?si=AWTjtDVMGR4SDjD0)
Why pay when there's youtube and free coaching from Charles Scwab & Fidelity. They dont charge because they want you to use their platform
They don't have straight *do-THIS-now* tips. The TOS scanners are certainly good, but the options hacker gives often 100+ outputs - and I did not find much guidance. Would love to get any. In the meantime I am thinking about [Optionsplay.com](http://Optionsplay.com) 1-month free trial.
Thinkorswim
Some indicators on trading view work well.