2021-02-07 Sunday


The last painful week of January has been completely forgotten with the market not only recovering completely from the losses but also pushing to a breakout of all-time highs that so far has been successful. We’ll be opening next week in deep overextension on the upside, and after such monstrous weekly gains, a new pullback (or at least a consolidation period) can be behind the corner.


Weekly performance (Week 5/2021)
– SPY (S&P500) +4.77%
 QQQ (Nasdaq100) +5.34%
 DIA (Dow Jones Industrial) +3.91%
 IWM (Small Caps) +7.83%

After the previous week’s spikes, volatility (VIX) has been free-falling towards the 20 levels. Also in this case more consolidation inside this range can be ahead of us.



On the 02/05 expiration I had only 6 positions to manage: 3 cash-secured-puts (CSP) and 3 covered calls (CC).

ETSY was up strongly on Thursday and getting overextended to the upside. I decided to close the CSP one day ahead of expiration for just a $0.05 debit to take any risk off the table. I was able to keep 97% of the premium in just 3 days for a 110% annualized return.


In two months this is the fourth CSP I played on SWK and all on the $170 strike price. This time once again the trade worked very smoothly expiring worthless for a 100% profit. The wheel strategy is so powerful that can be used with so much success also on boring stocks like this one that has been basically going nowhere for quite a bit of time.


After the recent pullback ADI has been trapped in an horizontal consolidation and I was assigned on it after the close on Friday. Not a big deal as the stock is already above the break even line and I am ready to sell CC on the way up.


On 01/29 I was assigned on 3 cash-secured-puts and had to buy 100 shares of CAT, JPM, and TGT. After just one week I have been able to get rid of all of them. I made money initially from the sale of the CSP, then on the sale of the CC, and finally on the price growth when I was assigned on 02/05 after the close and had to sell the shares for a profit. This is Wheel Strategy 101, allowing to profit from a single stock in multiple ways during a short period of time.


The total premium collected for the week has been $921 (net of brokerage fees) with an average holding period of just 6 days and an annualized return of 79%. On top of it, I gained a total of $600 from the price growth of the shares from the 3 covered calls that closed above the strike price on Friday. 

About 67% of my wheel strategy portfolio is now in cash and ready to be deployed on new CSP as soon as new opportunities will come along.

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In case you have any questions just send me an email at info@thewheelstrategy.com

Take care and trade wisely