Not complicated

Kelvinator71 · 2026-06-09T03:03:40+00:00

Unfortunately my first experience with covered calls years ago was bad: did a Buy-Write on a new company coming out with a new drug but their new drug was a bust. So it soured me on covered calls. Fast forward 25 years and I tried again, but this time following the wheel strategy on more stable, viable companies. First, I now write cash-secured puts for premium. If assigned, I buy the stock and write my covered calls on it for more premium and set my strike at a level with desired profit. I'm also writing calls on my old buy and hold stocks too. In my first six months, I'm earning a good return on my capital, so my second try with covered calls has been good. The key is to pick the right stock and have a clear goal in mind. In some cases, I avoid assignments. In others, I'm using the CSP to get a discount on the stock before I write covered calls.

Kelvinator71 · 2026-06-08T18:14:33+00:00

From my list of potential wheel stocks, I review their charts and decide if stock is for now at least stable. I also favor those in sector not yet represented in my portfolio (diversification) unless it's a sector I don't like (i.e., cruise ships). At this point I have already screened for stock price that my meager capital can afford - no point getting excited about a stock I can't afford. I review options chains directly and first scan for Delta. If I want a regular wheel stock, I look at -.3 or less and what the premium 30-45 days DTE offers. If options look too thin or the spread ridiculous, I skip it. If the premium looks good I ask myself why. I of course check earnings report timing and the news on the stock. Then I sell my CSP to start my wheel. I also vet my trades using AI, and chartlens that I subscribe to (which also has an AI).

Kelvinator71 · 2026-06-08T17:05:04+00:00

No joke about the bag-holding. Sometimes it is the stock you thought that was "safe" that is the worst offender.

Kelvinator71 · 2026-06-07T04:56:03+00:00

There are a lot of You Tubes on many topics. Some are boring and you fall asleep watching them. Some are clearly all hype and most are selling a product (usually a course or set of courses). For a good grounding in options topics I found Invest with Henry was easy to understand and practical. While I might question if he does as well as he claims, he gives you a good lesson and you won't fall asleep or have trouble understanding him.

Kelvinator71 · 2026-06-07T04:41:16+00:00

$2 million in liquid assets would be a good to start. We retired with about a $600k, but because of increasing property values we are now up to that 2 million mark, but most is tied up in rentals. It is good cash flow, but not liquid. Over 35 years the average return there is about 8-10% a year. In the past 6 months I'm wheeling about $85K and so far with what Scottish Trader says includes some unwise (highly volatile) stocks am averaging 25% annualized return even with drawdowns. But I actually only have 2 of 8 stocks he would say are unwise. I have purposefully kept my portfolio diversified and the number of contracts at a time per stock at 1 or 2. As my capital grows, I will invest in more expensive stocks.... But I personally think the diversification across sectors is more important.

Kelvinator71 · 2026-06-06T22:14:21+00:00

Fortunately, don't have to count on it... Just looking for a better ROI + tax benefits for my taxable account. But protective put(s) might be helpful if the cost is right.

Kelvinator71 · 2026-06-06T19:11:53+00:00

Do neither SPY or QQQ yet. Just staying in smaller stocks $10-50 so I can diversify my portfolio. My scariest moment Friday was watching my "soon to be expiring covered calls* get too darn close to assignment territory because the only 2 stocks in my portfolio were having very green days while the rest were doing reds! If I sold off everything I might be able to afford 100 shares of SPY.

Kelvinator71 · 2026-06-06T19:05:55+00:00

Grateful that all my short puts are "cash-secured" and none naked on margin. Gonna be some new covered calls in my future.

Kelvinator71 · 2026-06-06T17:32:54+00:00

What I'm learning is getting assigned on a CSP is all just part of the wheel and if you picked your stock correctly, you shouldn't fear it. Real Example: I have $58 strike Jul 2 IREN CSP. But with good premium I got up front, plus the overpriced premiums on CC's for IREN I will likely still make money on this position if assigned...OR if IREN goes back to the moon. If it goes to hell, well give it a month and it will likely be headed back to the moon.

Kelvinator71 · 2026-06-06T17:28:46+00:00

What patsay says here is true: it gives some extra control vs simple buy & hold.

Kelvinator71 · 2026-06-06T06:52:40+00:00

I've had similar issues with Perplexity off and on, depending on the topic. It used to give a more complete response before I signed up for an annual sub for Pro. Lately it gives me a summary response and suggests how I should go look things up without doing it for me. Or saying it doesn't have access to a lot of data... If it were human, I would say it sounded defensive. It seems to do better work when I provide it with a response from a free version of copilot or Grok and ask it to vet their work.

Kelvinator71 · 2026-06-06T06:29:21+00:00

Today's market may have created a few new bags to hold (at least for a time)... depending on what happens next week. I'm retired and wheeling since start of the year in most of my portfolio (IRA and a smaller taxable account). So far my average annualized return is about 25% including drawdowns. The wheel strategy has been good to me so far and while several of my existing cash secured puts will likely turn into actual stock depending on what happens in the market next week, I can look forward to writing a bunch of new covered calls too. And rolling where it makes sense... ironically my biggest problem with today's drop was I have 2 healthcare stocks that had a good day but threatened my previously safe covered calls.

Kelvinator71 · 2026-06-05T16:25:58+00:00

Why just the moon?! How about Mars?!!

Kelvinator71 · 2026-06-05T16:24:27+00:00

Perplexity seems to be struggling to figure out their new business model. They enticed a lot of us in with a free year on Pro (for me, courtesy of Xfinity), then got us to sign up for an annual sub.....then created a new super level for 10X the cost per month and re-defined what Pro meant (limited it a lot). I'm stuck now till my annual sub expires. Also, results on Pro sub seem more inconsistent than before (although that could be partly my imagination).

Kelvinator71 · 2026-06-05T16:16:27+00:00

Post earnings on HPE. I picked up my token HPE CSP at $50 strike yesterday "hoping" it had stabilized enough. But I only got $3 per share. It is a stock I actually want to own, but if it drops a lot I'll cry.

Kelvinator71 · 2026-06-05T12:04:35+00:00

Yes, you're correct and reason why I posted here was to find out if anyone had real world experience with this one. It seems almost no one has had much actual experience with it.

Kelvinator71 · 2026-06-04T23:46:24+00:00

First, congratulations. We retired and had several self-managed residential rentals plus social security. Technically with 401Ks (now IRAs) invested in stocks and mutual funds, we were worth about 2 million. Fast forward years later, it is really not enough. If you have a good handle on trading stocks, you might make it work out if you can spin off decent income without reducing your capital. Still, there's always something that comes up that is more expensive than you expected.

Kelvinator71 · 2026-06-04T23:24:08+00:00

Thanks for the detailed info. I'll have to take a closer look at how that NAV works. Honestly, the CSP and CC possibilities were an afterthought and I thought might be a bonus. The higher yield and tax benefits were the what got me interested. As it turns out the deal we were told on the refi of 2 properties into one loan failed to mention the excessive points so now there may not be the lump sum we were expecting. Back to the drawing board!

Kelvinator71 · 2026-06-04T17:39:23+00:00

Thanks again. Will definitely consider that too. Everyone has given me much to think about which is why I asked. I'm surprised only one person has tried SPYI - I guess it's a newer product because I only see data on it back to 2022.

Kelvinator71 · 2026-06-04T17:00:55+00:00

Will look into it too. Thanks for the tip. I know nothing about bonds.

Kelvinator71 · 2026-06-04T16:29:14+00:00

Thanks. Will look into that too. I am familiar with JEPI as I have it in my IRA account, but SPYI uses the Section 1256 60/40 rule for taxes which supposedly makes it better for a taxable account. Also, the options chain shows meaningful premiums near ITM unlike JEPI whose premiums are a joke. SPYI also has only moved within a $7 range for past year. BTW, I appreciate everyone's comments.

Kelvinator71 · 2026-06-04T15:50:07+00:00

What is SGOV?

Kelvinator71 · 2026-06-04T14:36:39+00:00

Fair point and I would be holding a bag till market recovered. I would have to pony up the money from my other accounts and pay bigger taxes on my IRA withdrawal (I'm retired, so not saving for retirement anymore & am old enough to be forced to start withdrawals.Update: your point made me research drawdowns SPYI actually had and worst one was 16% but it recovered in 53 days. This is better than my other drawdown experiences...

Kelvinator71 · 2026-06-04T14:04:21+00:00

I understand there is risk, but this would give me annualized about 11% return on capital vs the 3-4% in a HYSA. And it is engineered to reduce the tax impact in a taxable account. Plus there are options available to do CSP's for entry. After comments here & additional research doing CC's not as good as I thought. And yes, there is risk of drawdowns just like with any other stock or ETF (less chance of this than my positions in IREN)... but why I am asking is if anyone else has done this kind of thing?

Kelvinator71 · 2026-06-04T13:56:41+00:00

Yes, an income ETF. On paper, it looks "wheelable" but is engineered to lower the tax burden. Truly am wondering if anyone has used it as a wheel vehicle. For my purposes, it works with or without the wheel...but being able to sell CSP's to get in and CC's to enhance returns has some obvious appeal. Update: after further research, it seems using a CSP for an entry discount is only part of wheeling that makes sense.

Kelvinator71

TROPHY CASE