re: Theta gang/ the wheel trades week of 3/15

It’s a strategy that I’ve used for several years. And it can be very profitable. But I tend to avoid special situations (other than earnings announcements), as their price movements are rather unpredictable. I generally use the deltas to decide my strikes, and when unexpected news could hit at any time, that screws up the predictable range.

With this strategy I use the deltas, as well as some basic charting to see where I’d be content to own the stock if the naked put does go ITM. And then I set a profit target for the short call strike (irrespective of delta) as my desired exit point.

I used the strategy on PLUG and got shares at 16 way back when. I made a good return when it got called away at 18. But look at it now. So you have to be prepared for a stock to run after it gets called away, and also for a stock to collapse (FSLY) once it gets put to you. Just have to remember that you’re playing a long game with this particular trading (NOT an investment) strategy.