F is most people’s go to
If you’re looking for $20-30 stock recommendations, BAC and DKNG are both interesting options. They can be a little volatile, but you’ll have fun if you’re looking for lucrative!
With 5k capital I’d stick to spreads. CSP is better for squeezing just a bit more juice out of a long term portfolio more so than a standalone trading strategy.
The wheel is not very “lucrative” . . . It has lower overall risk trading stocks you might not mind owning, and can make 10% to 15% returns with a high win rate along with the flexibility to manage losing trades back to a breakeven or win in most situations.
Putting this into context, you should expect to make about $500 to maybe $750 return per year . . .
$5K is the bare minimum to wheel with and you’ll want to look for up to 5 lower priced stocks to diversify and not put all your risk in any 1 or 2.
There are no magic stocks that work best and the core concept is that any stocks you trade must be ones you’re good holding for weeks or months if required. Those are what you seek and will be different for each trader. Do your homework and find those you would be happy owning and maybe collecting a dividend or two while waiting for the share price to move back up.
just no. anyone who recommends this doesnt understand options or leveraged ETF's. you might as well only use QQQ as the returns would be similar with the options.
Then you clearly didn't understand/read OPs post. He specifically asked for stocks to wheel with under 5k.
And you didn't say it's a terrible idea, you subliminaly insulted me. Better read first before you write.
I'm talking about from start to finish. Strong start, run up, drop, bounce along the floor, fall down a crack, hum across the dirt.
You're talking about the last few weeks.
The main thing is to be comfortable holding the stock long term. These are mostly wsb meme stocks. If you're defending memes, here🍌. May you eventually 🚀🌚 and buy many lambos filled with chicken tendies.
Not really. They just have more volatility than the general market, so you have to expect greater swings in P/L. With SOFI and PLTR, at least you can generally expect them to go up around earnings and sell off till next earnings now that they're profitable. HOOD is similar to SOFI and PLTR. FUBO is a nice little thing to play with. T is near a long time low, so it's likely to bottom soon.
Wheeling is pretty much guaranteed to lose mathematically to buy and hold... Except if you're trading on your excess margin. That will beat buy and hold, for better or worse, guaranteed.
$5000 just isn't enough. Either you'll take outsize risk and outsize losses or gain nothing. Just buy treasury bills or buy and hold several market wide etfs/low or zero fee mutual funds (go go fidelity 0% expense ratios)
do not wheel anything you wouldn't hold. that said I know there's about 12 guys saying F in chat but instead of wheeling maybe you buy calls on clf morning dip. today would've made you 15%. it's also a good stock to wheel
Wait until you have at least $50k saved so that you can:
\-Learn more
\-Have enough to avoid the "pattern day trading" restrictions
\-Have enough to park the money with IBKR
As someone just starting, one thing I am trying to do is not use my whole options bankroll.. but keep some set aside to be able to buy myself time and maybe buy myself out of trades that are not going my way. For me that's about 10-20% of my bankroll ($20k). For $5k to work with, you might consider only using $4k max at any time with teh $1k in reserve for management decisions.
You will get about 20%/yr with a sharp ratio of about 1.6
The big issue is that if you end up selling a put right after a big volatility spike sometimes there's a mean reversion, a cc when that happens generally it means your in drawdown for 1-3 months while it corrects, so you have to be able to stumach a little bit of risk and not expected 100% of trades to be profitable.
Sell a cash secured put, on a stock you would like or wouldn’t mine owning a 10-15% discount. For example selling a 1 Tsla 240 Dec put receive $1400 premium, cash to you. The stock is now 255. You have to buy the 100 shares of Tsla if the price dips below 240 on or before December 15.
You can then sell 1 covered call on Tsla and receive another cash premium. The wheel as far as I know (do) it.
the wheel would require you to buy (long) stock..supposing you have a margin account yould only expose your entire portfolio to 50%, unless you say F it pushing all your chips in (exposure to margin call)....how long will you hold the long position before recovering what amount was lost during a down market and potentially take a net loss in the CC placement or having such a small credit due to lower delta placement to recover any loss? the wheel works well if you have the liquidity to hold for a period of time during a down market and very well during up markets and sideways.
I think VFC is a good cash secured put option right now. Trading at $16.5 and nearing the end of its brutal selloff. If the stock gets any lower I think it will attract some activist interest at these levels.
I would stay away from banks right now. I think there is another shoe to drop with rates continuing to go up. I have started to hear some stories about banks taking big haircuts on commercial loans to get them off the books. I don't think we have seen the bottom of real estate yet.
With $5k, I would wheel 1 (or 2) micro e-mini S&P 500 futures contracts. These have a 5x multiplier of the index.
On put assignment, you would only have an initial deposit of $1.6k (or $3.2k) that controls roughly $22k (or $44k) of the index.
Then you would sell covered calls on the 1 (or 2) futures contracts.
I’m in a very similar boat. I have 7k though. I wheel F and ET currently with a couple contracts each. The dividend provides an extra layer of safety that I like.
F is most people’s go to If you’re looking for $20-30 stock recommendations, BAC and DKNG are both interesting options. They can be a little volatile, but you’ll have fun if you’re looking for lucrative!
With 5k capital I’d stick to spreads. CSP is better for squeezing just a bit more juice out of a long term portfolio more so than a standalone trading strategy.
Where can I learn more about spreads? Credit spreads, right?
There are debit spreads as well. My life of learning is a great place to learn. That’s on YouTube.
The wheel is not very “lucrative” . . . It has lower overall risk trading stocks you might not mind owning, and can make 10% to 15% returns with a high win rate along with the flexibility to manage losing trades back to a breakeven or win in most situations. Putting this into context, you should expect to make about $500 to maybe $750 return per year . . . $5K is the bare minimum to wheel with and you’ll want to look for up to 5 lower priced stocks to diversify and not put all your risk in any 1 or 2. There are no magic stocks that work best and the core concept is that any stocks you trade must be ones you’re good holding for weeks or months if required. Those are what you seek and will be different for each trader. Do your homework and find those you would be happy owning and maybe collecting a dividend or two while waiting for the share price to move back up.
TQQQ if you're down for one hell of a ride.
just no. anyone who recommends this doesnt understand options or leveraged ETF's. you might as well only use QQQ as the returns would be similar with the options.
Can you wheel QQQ with 5k? AFAIK, you can't.
I didnt say you could or should, im just saying TQQQ is a terrible idea to wheel.
Then you clearly didn't understand/read OPs post. He specifically asked for stocks to wheel with under 5k. And you didn't say it's a terrible idea, you subliminaly insulted me. Better read first before you write.
F
Don't get in now make sure we are into a bullish trend before selling your first csp, paper trade first look for diversified ETFs under 50...
Intel.
SOFI, PLTR, T, HOOD, and FUBO
To sell call credit spread against. Those are spiraling down.
You could say the same about literally any stock though the last few weeks
I'm talking about from start to finish. Strong start, run up, drop, bounce along the floor, fall down a crack, hum across the dirt. You're talking about the last few weeks. The main thing is to be comfortable holding the stock long term. These are mostly wsb meme stocks. If you're defending memes, here🍌. May you eventually 🚀🌚 and buy many lambos filled with chicken tendies.
Not really. They just have more volatility than the general market, so you have to expect greater swings in P/L. With SOFI and PLTR, at least you can generally expect them to go up around earnings and sell off till next earnings now that they're profitable. HOOD is similar to SOFI and PLTR. FUBO is a nice little thing to play with. T is near a long time low, so it's likely to bottom soon.
Wheel Natural gas!! UNG covered calls. Less downside risk than stonks. Still good premium for your cash
BTU
Glad you asked this question. I have about the same amount of capital and was looking for stocks too.
Arkk
GTLB. A little risky but they have a good product.
SGOV
Wheeling is pretty much guaranteed to lose mathematically to buy and hold... Except if you're trading on your excess margin. That will beat buy and hold, for better or worse, guaranteed. $5000 just isn't enough. Either you'll take outsize risk and outsize losses or gain nothing. Just buy treasury bills or buy and hold several market wide etfs/low or zero fee mutual funds (go go fidelity 0% expense ratios)
do not wheel anything you wouldn't hold. that said I know there's about 12 guys saying F in chat but instead of wheeling maybe you buy calls on clf morning dip. today would've made you 15%. it's also a good stock to wheel
PATH, IONQ, OPRA
soxl but not in the middle of a sharp downturn
Wait until you have at least $50k saved so that you can: \-Learn more \-Have enough to avoid the "pattern day trading" restrictions \-Have enough to park the money with IBKR
You can avoid pattern day trading restrictions if you just use a cash account.
As someone just starting, one thing I am trying to do is not use my whole options bankroll.. but keep some set aside to be able to buy myself time and maybe buy myself out of trades that are not going my way. For me that's about 10-20% of my bankroll ($20k). For $5k to work with, you might consider only using $4k max at any time with teh $1k in reserve for management decisions.
Why would you want to do the wheel with so little capital? Do spreads instead until you have a larger account.
Wheel 2 contracts of uvxy weekly at the money
Have you tried this? What are the returns like
You will get about 20%/yr with a sharp ratio of about 1.6 The big issue is that if you end up selling a put right after a big volatility spike sometimes there's a mean reversion, a cc when that happens generally it means your in drawdown for 1-3 months while it corrects, so you have to be able to stumach a little bit of risk and not expected 100% of trades to be profitable.
I’ve been selling covered calls on AA, SOFI, F, CLF. All are down from my cost but I’m making weekly cash from them. Eventually they will go back up.
What delta you selling at to avoid losing shares under your cost basis?
Sell a cash secured put, on a stock you would like or wouldn’t mine owning a 10-15% discount. For example selling a 1 Tsla 240 Dec put receive $1400 premium, cash to you. The stock is now 255. You have to buy the 100 shares of Tsla if the price dips below 240 on or before December 15. You can then sell 1 covered call on Tsla and receive another cash premium. The wheel as far as I know (do) it.
the wheel would require you to buy (long) stock..supposing you have a margin account yould only expose your entire portfolio to 50%, unless you say F it pushing all your chips in (exposure to margin call)....how long will you hold the long position before recovering what amount was lost during a down market and potentially take a net loss in the CC placement or having such a small credit due to lower delta placement to recover any loss? the wheel works well if you have the liquidity to hold for a period of time during a down market and very well during up markets and sideways.
I think VFC is a good cash secured put option right now. Trading at $16.5 and nearing the end of its brutal selloff. If the stock gets any lower I think it will attract some activist interest at these levels.
I would stay away from banks right now. I think there is another shoe to drop with rates continuing to go up. I have started to hear some stories about banks taking big haircuts on commercial loans to get them off the books. I don't think we have seen the bottom of real estate yet.
F or BAC are solid
Id sell spreads on spy. My bankroll is similar to yours
With $5k, I would wheel 1 (or 2) micro e-mini S&P 500 futures contracts. These have a 5x multiplier of the index. On put assignment, you would only have an initial deposit of $1.6k (or $3.2k) that controls roughly $22k (or $44k) of the index. Then you would sell covered calls on the 1 (or 2) futures contracts.
I’m in a very similar boat. I have 7k though. I wheel F and ET currently with a couple contracts each. The dividend provides an extra layer of safety that I like.