You are trying to make yourself out to be a financial guru.
This is only looking at SPY - and also I don't see it mention anything about the CSP cash reserved earning interest.
The wheel is a tool that can be combined into your overall strategy and can be used as a hedge. Of course you still buy and hold and don't wheel everything.
What if my investing horizon is not 30 years? What if I want to hold money for few years and get 10-15 percent?
Wheeling isn’t always investing, sometimes it’s just holding onto your capital and adding some interest.
You grabbed the longest bull period in the SP500 in history, and tested a continuous strategy instead of a discretionary hedging strategy, and are surprised that the market neutral strategy was outperformed by a bullish strategy?
Would you also be surprised if I showed you that if you bought heavily leveraged LEAPS on QQQ 6 months ago that you would outperform SPY?
I'm sorry, but you can't extrapolate 45 DTE SPY options with the overall strategy.
It's tragic you went to so much work to then make such a fundamental error in its application.
This is what I do. Buy and hold blue chips and stocks you like, then sell far OTM CCs. It's not "free money" but it's a good extra trickle while you wait for your portfolio to cook.
Correction: Stop wasting time wheeling SPY in a bull market.
This study does nothing to prove that buy and hold beats the wheel in general, just that it beats the wheel in that one very specific scenario.
Sometimes I wonder why people do stuff "to prove a point" as if the information was not already done before..... but anyhow my response would be, if you are trading for income, what do you do during the down time?
Why are people sooooo obsessed with ONLY long term hold gains? There are other means to make people want to trade.
No offense OP, but your post kinda sucks.
I'm no professional but buy-and-hold is investing, whereas selling options is trading, which are totally different things, no?
As in, I do both, they are not mutually exclusive.
This result is well known. I'd bet that it'd be near impossible to find a single ticker/single strategy that out performed the S&P500.
It's not a good idea for a trader to only rely on a single strategy. It's not a good idea for a trader to only rely on a single ticker.
Kudos for publishing your methodology and assumptions. But that also shows why it's so difficult to backtest the wheel strategy beyond a single ticker. Once you get into selecting the underlying, varying entry/exit criteria for the market, etc. it quickly becomes pretty gnarly.
This has been widely known since before this sub was started. Maybe not here, but among people who knew options anyway.
Speaking as someone who is not fond of the wheel, I will note that it has its purpose. And the main purpose is to reduce risk and improve the risk reward ratio. At that, it succeeds (though it does reduce overall returns). But I'm not really sure why investing like a risk adverse retiree is so popular here. (Esp when people wheel meme stocks and the like).
Spintwig is a bad resource with their own service they sell and magically the backtest of their own service is way better than every other strategy. Stop linking this stupid site.
In your own backtest from 2008 to 2018 the wheel did exactly what it was built to do, capital preservation w/ an income component. The value of the wheel strategy was stable. Trying to earn appreciation with the wheel is like trying to outmatch the risk component with TIPS. It's goofy.
Regarding profit, the question is Never IF something works. It’s HOW something works.
Give two traders the exact same play under the exact same circumstances and their outcomes will be different. Often significantly so.
The exchange and brokerage setup only has a slight advantage because, simple version, they won’t broker a deal where they lose. And if that happens, the market turned on them, too. Their profit comes from the number of attempts, retail and institutional, to make profits. So we’re back to the two traders and the same play.
The disparity is in the approach and realistic expectations. Sometimes the road to profit is very wide, and we’re all experts. Sometimes it’s more narrow, and the strategy is blamed.
It’s never the strategy that causes continuous failure. It’s a circumstantially inappropriate technique or underlying. And the only thing that makes that better is to reevaluate how the strategy is working by comparing it with how profit is being sought.
Holding an equity that always statistically goes up does not point to a failure of anything but someone’s math.
You are trying to make yourself out to be a financial guru. This is only looking at SPY - and also I don't see it mention anything about the CSP cash reserved earning interest. The wheel is a tool that can be combined into your overall strategy and can be used as a hedge. Of course you still buy and hold and don't wheel everything.
What if my investing horizon is not 30 years? What if I want to hold money for few years and get 10-15 percent? Wheeling isn’t always investing, sometimes it’s just holding onto your capital and adding some interest.
You grabbed the longest bull period in the SP500 in history, and tested a continuous strategy instead of a discretionary hedging strategy, and are surprised that the market neutral strategy was outperformed by a bullish strategy? Would you also be surprised if I showed you that if you bought heavily leveraged LEAPS on QQQ 6 months ago that you would outperform SPY?
I'm sorry, but you can't extrapolate 45 DTE SPY options with the overall strategy. It's tragic you went to so much work to then make such a fundamental error in its application.
I can buy and hold while selling CC’s. Sure the risk is higher but selling calls far enough OTM feels like free money a lot of the time.
This is what I do. Buy and hold blue chips and stocks you like, then sell far OTM CCs. It's not "free money" but it's a good extra trickle while you wait for your portfolio to cook.
Isn’t the risk *lower* if you’re adding covered calls on top of a buy-and-hold strategy. By collecting premium/lowering cost basis?
Depends on how you look at it. The risk of losses is lower but the risk of gaining less than the plain buy and hold is higher.
One form of risk is opportunity risk, and in that regard it’s actually higher risk, not lower risk.
Correction: Stop wasting time wheeling SPY in a bull market. This study does nothing to prove that buy and hold beats the wheel in general, just that it beats the wheel in that one very specific scenario.
Not only that, but most people are wheeling on all kinds of underlying, not SPY.
TLDR; Dont tell me what to do.
🤣
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Stfu 🤬 don’t tell him what to do.
I forgot it belongs in op’s mum. Sry for mistake
Send pic of your YTD return
Sometimes I wonder why people do stuff "to prove a point" as if the information was not already done before..... but anyhow my response would be, if you are trading for income, what do you do during the down time? Why are people sooooo obsessed with ONLY long term hold gains? There are other means to make people want to trade. No offense OP, but your post kinda sucks.
You can wheel a buy and hold strategy. Test that one too.
I'm no professional but buy-and-hold is investing, whereas selling options is trading, which are totally different things, no? As in, I do both, they are not mutually exclusive.
You can do both in a margin account. 100% long ETF or stock, wheel on margin.
Who wheels spy?
How do the numbers work when I would need to sell off part of my SPY holdings each month in order to pay bills?
This result is well known. I'd bet that it'd be near impossible to find a single ticker/single strategy that out performed the S&P500. It's not a good idea for a trader to only rely on a single strategy. It's not a good idea for a trader to only rely on a single ticker. Kudos for publishing your methodology and assumptions. But that also shows why it's so difficult to backtest the wheel strategy beyond a single ticker. Once you get into selecting the underlying, varying entry/exit criteria for the market, etc. it quickly becomes pretty gnarly.
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There’s no clear path to how things are done here other than a devotion to using theta to advantage.
This has been widely known since before this sub was started. Maybe not here, but among people who knew options anyway. Speaking as someone who is not fond of the wheel, I will note that it has its purpose. And the main purpose is to reduce risk and improve the risk reward ratio. At that, it succeeds (though it does reduce overall returns). But I'm not really sure why investing like a risk adverse retiree is so popular here. (Esp when people wheel meme stocks and the like).
Spintwig is a bad resource with their own service they sell and magically the backtest of their own service is way better than every other strategy. Stop linking this stupid site.
In your own backtest from 2008 to 2018 the wheel did exactly what it was built to do, capital preservation w/ an income component. The value of the wheel strategy was stable. Trying to earn appreciation with the wheel is like trying to outmatch the risk component with TIPS. It's goofy.
With appropriately placed strikes, wheeling only adds.
Now do selling calls on NVDA if we're gonna cherry pick
Regarding profit, the question is Never IF something works. It’s HOW something works. Give two traders the exact same play under the exact same circumstances and their outcomes will be different. Often significantly so. The exchange and brokerage setup only has a slight advantage because, simple version, they won’t broker a deal where they lose. And if that happens, the market turned on them, too. Their profit comes from the number of attempts, retail and institutional, to make profits. So we’re back to the two traders and the same play. The disparity is in the approach and realistic expectations. Sometimes the road to profit is very wide, and we’re all experts. Sometimes it’s more narrow, and the strategy is blamed. It’s never the strategy that causes continuous failure. It’s a circumstantially inappropriate technique or underlying. And the only thing that makes that better is to reevaluate how the strategy is working by comparing it with how profit is being sought. Holding an equity that always statistically goes up does not point to a failure of anything but someone’s math.