Is Wheel strategy profitable?

Is the wheel strategy profitable? The wheel options trading strategy is most profitable (when compared to simply buying the stock) when the underlying stock is minorly bullish. If the stock goes up too much, the wheel strategy will lose money when compared to owning the stock outright.

projectfinance.com - The Wheel Options Strategy: Collect Income From Options - projectfinance

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Make Your Bookie Cry And Pull The Hair By Generating $23,187

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In this trade, Ford rallied from $13 to $14.25 at the time our short call expired. This means our call expired in-the-money. The final premium of the option was 0.25. Since we sold the option for 0.40, we made 0.15 ($15) on the trade! However, since our option was in the money, we will be assigned on our short call. When assigned on a short call, you must deliver -100 shares of stock. But remember, we were already long 100 shares of stock. Therefore, this short assignment will offset our long stock, leaving us with no position in Ford.

To sum up the entire wheel position:

1) Shorted the 14 put for $0.60.

2) Stock fell to $13 and we got assigned on the 14 put, purchasing 100 shares at $14/share. Effective purchase price = $14 put strike – $0.60 put premium collected = $13.40.

3) Shorted the 14 call for $0.40.

4) Stock rallied to $14.25 and we got assigned on the 14 call, selling our 100 shares for $14/share. Effective share sale price = $14 call strike + $0.40 call premium collected = $14.40. Total Position P/L: ($14.40 effective sale price – $13.40 effective purchase price) x 100 shares = +$100. Another way to consider this P/L is to calculate the account inflows and outflows.

1) Shorted the 14 put for $0.60: $60 inflow

2) Buy 100 shares @ $14/share via put assignment: $1,400 outflow

3) Shorted the 14 call for $0.40: $40 inflow

4) Sold 100 shares @ $14/share via call assignment: -$1,400 outflow

$100 option inflow – $0 stock outflow = $100 net inflow.

A different way to get to the same conclusion is to consider closing the options at expiration and buying/selling the shares at the current stock prices. 1) Short the 14 put for $0.60, stock drops to $13. Close 14 put for -$0.40 and buy 100 shares at $13. 2) Short the 14 call for $0.40. Stock climbs to $14.25. Close the 14 call for $0.15 profit and sell shares at $14.25. Stock P/L: $14.25 sale price – $13 purchase price = +$1.25 x 100 shares = +$125 Option P/L: -$0.40 on short put + $0.15 on short call = -$0.25 x 100 = -$25.

Net P/L: $125 stock profit – $25 option loss = +$100.

Same result, different math.

And we’re back to where we started from!

To complete the cycle, sell another put option on Ford, and repeat!

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When should I straddle in poker?

Things You Should Know Use a straddle bet to buy the opportunity to act last in the round of betting before the flop. Straddle when you're on the button so you get to act last both before and after the flop. Avoid straddling if you're inexperienced at live games or don't have a lot of chips.

wikihow.com - The Poker Straddle: What It Is and When to Use It - wikiHow

You've been playing Hold 'Em online for a while and you've decided to test your skills at a live cash game. Everything's going great until the dealer announces "straddle" and you see that the player to the left of the big blind has placed a bet before the dealer has even dealt the hole cards. What's going on? A poker straddle can take you by surprise if you're used to online games, but it's pretty easy to wrap your head around. Read on to learn everything you need to know about straddling in poker, including different types of straddles and when you should consider straddling.

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