Hypothesis: On the long term SPY index always go up so selling naked puts on SPY will always and up with new high and turning wjeel cycle onto cash
Strategy:
- open short naked weekly ATM put and wait for expiration. IF not assigned (expired worthless): go to 1), ELSE: go to 2)
- open short covered weekly OTM call (the same strike as was in put) and wait for expiration. IF not assigned (expired worthless): go to 2), ELSE: go to 1)
Questions:
- what investing outcome is possible?
- what is historical greatest dropdown?
- what is minimum and maximum trade time before chash out?
- what is a frequncy of wheel cycles?
- what is annual performance with given strategy?
- how profit withdrawal affects portfolio value?
Specifics - biggest option premium is in ATM (at the money) options, the deeper it is OTM (out of the money, distance between actual asset price and option strike - bet price) the less premium it has, so if SPY does not renew its high for long time, we earn nothing.
#wheel_strategy