I feel like the trading thread has enough questions about The Wheel for it to warrant its own thread.

If you're not familiar with the strategy here's the idea in my own words:
1: Identify volatile stocks that you "wouldn't mind owning"
2: sell cash secured puts slightly out of the money
3: repeat step 3 until you get your put assigned
4: sell covered calls on your shares
5: repeat step 4 until your shares get called out
6: back to step 1

here's a video if that explains it better (not my video):


And here's a reddit thread that explains it well, also not my thread:
https://www.reddit.com/r/options/comments/a36k4j/the_wheel_aka_triple_income_strategy_explained/

I'd like to use this thread primarily to discuss stocks that appear to be good prospects for applying this strategy. I am currently focusing on stocks with weeklies available, high premiums, and which seem to be nearing the bottom of an unwarranted slump (identifying ones near the bottom of a darvas box looks like it has promise)

Also happy to use this thread to discuss technicalities, risk, tax implications, etc with the strategy.

If it grows legs I'd be glad to come back and update this post with additional references/notes as requested.

Cheers!

I'll start the thread with my current favorites:
Momo with $19 weekly puts selling for .6 19 feels like the bottom of a darvas to me
CRWD with $103 weekly puts selling for 2.55 I love this stock anyway
NIO seems like a good prospect once it starts swinging back
SNAP $23 weekly puts at .47 look good and it's another powerhouse I wouldn't mind owning
edit: BUD looks like another good one with $50.5 weekly puts at $1

On the way down I would look at selling put credit spreads. The addition of the long put adds protection. You can buy the put wide enough to max your credit but still comfortable with the entry delta.

Example:
sell $100 put
Buy $95 put

Collect the credit of a $5 delta

If stock falls below $95 you pocket the additional premium and your long stock cost basis is further reduced.

is that similar to a synthetic covered call? Seems smarter but maybe a hair outside my comfort level. Is there additional risk doing it that way?

If you are talking to me you are just covering your put.

Selling a naked put requires cash to secure.

Buying the long put protects you from a "black swan" type move.

Gotcha...makes sense. Thanks!
edit: I just went back and grabbed $17 puts for .05 to cover my $19 cash secured puts that I sold for .6 Seems smart.

So in the event the stock price drops to or below $17, when I get assigned at $19 I will also exercise at $17, for a net cost of $2/share?

And if the stock price drops below $17 I actually start recovering some of that cost based on the increased value of my $17p? edit2: no I incur max loss of $2 at this point because I need to exercise the lower put to cover the liability of the higher one

And finally...does that make my max loss $2 in this transaction, and therefore I am only required to secure it with $2? Or does that require margin? Do I need to do something in TD to identify it as a credit spread? If so, that would make my roi 27.5% per week...so probably not edit2 again: I still need the $19/share to secure because that's the price/shr I'll pay if the stock price is below $19 but above $17, and I'll end up with the stock

Sorry for the dumb questions, appreciate the help... (edit2 againagain...and now I understand bull put spreads!)
https://www.investopedia.com/terms/b/bullputspread.asp