If so, how long? What were your yearly percentage gains? What are the pitfalls? Any tips or tricks to succeed?
If you failed at this, what were the problems you couldn't overcome?
Edit: "Successfully" = Profitably
Has anyone used the Wheel Strategy successfully long term?
byu/intercrew99 inoptions
Posted by intercrew99
4 Comments
Define “successfully”?
I have seen people do it profitably long term. But from what I see, looking real people’s returns and simulated returns, the wheel has lower returns and higher volatility than just a passive diversified portfolio.
Ideally you want a slow moving stock.. Pays a div (cause if your holding you want to be collecting returns)..
Problems is you need to be closer to the money get assigned more, have to sit long holding or add more capital to average down.
But there are totally people wheeling with enough capital stocks like Apple.. If you wheel long enough you eventually hit negative cost basis and start stacking stocks for long term…
But really all the grinding and you are at best breaking even against voo..
Hey! I have, I wont get into P/L too much but it has been profitable for me!
I am going to assume long term means more than 10 years for you.
Is it profitable? – The unfortunate answer is ‘it depends on the stock, your skills and more importantly the market’s mood’.
Is it worth? – NO.
– Even if you are profitable over the 10 year period, the amount of time, energy and the commissions ( yes, most ppl won’t talk about the commissions but they are expensive when you look back one year) you would pay is not worth when compared to buy and hold strategy.
– you would inevitably lose out on some significant upside. After that you would be collecting pennies when stock is going up significantly and you would be chasing. That great upside chance was probably the reason you bought it in the first place.
– sometimes you would be left hodling the bag and tell yourself ‘I am fine holding it for long term”. In reality, most ppl dont want to hold it as it locks up their capital and why hold it when it is going lower and lower. you could fool yourself by saying I am in it for the long term. btw, this is the point when most people decide it is not worth wheeling. I am one of them.
That being said, there are scenarios where you should do it for a short term.
– To satisfy the itch of being active in the market. A lot of people including me feel good about analyzing the stock and taking positions based on our analysis. Every now and then I would do it but not more than 1-2% of my capital. In that case, I am not looking to beat the market but merely to satisfy that trader instinct.