Let’s begin this post with a short story. God tells us in Luke 9:23 to, “take up our cross and follow me.” So, we’ll pick up this story from that instruction.

A man was sick and tired of carrying the burden(his cross) God had given him so he went to God and said, “I can’t do this anymore, I don’t want this burden, it’s too much for me.” God looked at him and said, “my child, follow me and I’ll show you a place to leave that cross.”

Excited, the man followed God into a room filled with crosses of all shapes and sizes. God told him, “have a look around and find one you believe fits you better.” As instructed, he proceeded to view every cross, he noticed a big nice cross but realized it was too big. He then found a really small one and thought, “this will be so easy to carry.” However, after picking up the small cross he felt ridiculous because he knew he could carry more.

Finally, after some time, the man saw an old, beat up, ragged cross sitting in the corner. He walked over and picked it up. To his amazement, this cross wasn’t too heavy, was just the right size, and just the right shape.

Excitedly, the man rushed over to God and asked, “can I have this one, it’s perfect!”

God told him, “my child, that’s the cross you came in with!”

The message – keep going and never give up. God gave us our burdens and when the time is right, He will come along side us to lift.

Now, I apologize for the long story but it was such a great piece of encouragement.

Daily Options Trading Strategy Introduction

Now, you’re here to learn about a daily options trading strategy so let’s focus on that. The strategy I want you to familiarize yourself with is the wheel options strategy, only daily. Not what you were expecting? That’s ok, this daily options trading strategy is one of the best ways to create cash flow each day.

As a brief aside, there are many options based ETF’s now days that could help generate some cashflow. However, as you’ll see in the sections below, there’s potentially more meat on that bone. Honestly, I own several of them, and I very much question if all the income generated is returned to shareholders.

In any case, I also created a free wheel strategy spreadsheet that may assist you in tracking this daily options trading strategy. Further, I’ve revised that wheel strategy spreadsheet on my free trading tools page for anyone interested. Every download is free and safe to use. If you like them, please leave a comment sometime to let me know how the wheel strategy is working out. I enjoy hearing from everyone!

Post Agenda

• Daily Wheel Strategy Overview
• Selecting an Appropriate Underlying
• Daily Strike Selection
• Target Income
• Exit or Double Down?
• Adjusting Poor Performers

Daily Wheel Strategy Overview

First, for those not 100% familiar with the wheel option strategy, have a look at this in depth review by SteadyOptions.com. After that you’ll be ready to understand how I’m reviewing this daily options trading strategy.

First, you’ll want to find a stock or ETF you’re comfortable with. We’ll look more specifically in the next section at finding an appropriate asset but it’s the single most important part to any successful wheel strategy. Once you’ve found that stock or ETF then you’ll just be selling puts, buying shares, selling calls, or selling shares.

The process sounds remarkably simple but let me tell you first hand, it isn’t. In fact, if you’re up to watch a few videos on Youtube, I did an entire series on trading the wheel strategy in a small account. Fair warning, it didn’t end well but that’s because I ended up in a very risky asset. Don’t do that :p

To sum up the wheel strategy, it’s simply identifying a stock you want to buy. Then selling a put at a price you want to buy those shares. Figure out how much upside you want to aim for and sell a call at that strike. If price rises to the short call, the shares will be called away and the process will start over. Again, it sounds really simple but the truth is, without following a specific plan you’re almost certainly going to end up holding a falling stock. Fortunately, you can watch and learn what not to do in that wheel strategy video series I made. Additionally, I’ve revised my plan quite a bit since then and I’ll share that with you as we go along.

Selecting an Appropriate Underlying

Once you’ve decided to attempt this daily options trading strategy you’ll want to make sure you have enough capital. I cannot understate that, to little capital will force you into an inappropriate underlying. So, take this to heart, finding an appropriate asset is paramount.

If you determine that Apple is the stock you want to wheel, then I suggest having enough capital to buy at least 200 shares. Admittedly that isn’t necessary to perform this daily options trading strategy but it offers way more flexibility. Regardless, under no circumstances should you just trade down to something you can afford 200 shares of.

If you absolutely must start this strategy without the capital needed, at least trade a company that is likely to continue trading into the future. Think something like Ford which is very cheap, but not something like Palantir, at least in my opinion.

Personally, I like SLV or the iShares Silver Trust for a small budget. They won’t return much in premium but they have a number of things that would make them suitable. They have plenty of options liquidity, and they’re very likely going to be around for the foreseeable future. However, don’t take that to mean I prefer SLV over everything else because I certainly do not.

In any case, let’s stick with SLV for the remainder of this post. As of today, SLV is at $28.67 so for under $6,000 dollars I could implement a daily options trading strategy here. However, one small caveat. SLV doesn’t have quite the number of expirations as SPY or QQQ so to truly perform a “daily” options trading strategy you’d have to have the capital to trade there. As of this writing, SPY, QQQ, and their larger index counterparts are the only assets with daily expirations.

Daily Strike Selection

Well, the hardest part of trading the wheel options strategy daily is finding an underlying to trust. Current market uncertainty may help push silver higher. If that happens then running a wheel strategy on SLV could make sense.

When selecting the strikes to sell a short option there are some questions to ask. Do you want to own the shares sooner or later? Is SLV is priced appropriately? Then it probably makes sense to sell a put closer to the money. If SLV could fall, then the options are to wait or accept a further out of the money strike.

As of this writing, there isn’t much daily premium going out of the money. So, nearer the money or a move further out in time are the only options. At 2 days to expiration, the at the money strike currently offers $17 dollars in premium. If it helps, it’s like receiving a $17 dollar dividend over the next 2 days.

If we’re already in a position and looking to sell a call, our options would be similarly limited. The only strike with any premium is right at the money. However, it’s worth noting, on an asset like SLV it could also make sense to trade an in the money call. This would increase cashflow and turnover at the expense of capital appreciation. Fortunately, in that regard, SLV also has $0.50 strike options available.

Regardless, if a higher priced asset is possible, moving further out of the money would be preferred. In this instance, I’m left with only at the money choices to gain the income. If more premium was available I would go slightly out of the money on the put. Then, way out of the money for the call.

Daily Options Trading Strategy Target Income

I think we’ll all agree the more income the better, right? While that’s true, it’s important to remember every step is connected. Becoming too aggressive chasing income will certainly leave you vulnerable elsewhere. Thus, when determining income needs balance should be the actual target. This balancing act isn’t easy but doesn’t need to be complicated either.

For example. suppose SLV had the following put premiums available at 2 days to expiration.

• $29 strike – $0.25
• $28.5 strike – $0.20
• $28 strike – $0.15

Which would be the most appropriate? There isn’t a wrong answer per say but if balance were the goal then the $28.50 strike would be the best choice, in my opinion.

Of course, those numbers would change but once that balance is determined, some target estimates could be made. In this instance, I would target somewhere near $10 each day. A little less if I was concerned about some downside, or a little more if I thought SLV was bullish.

Exit the Trade or Double Down?

First, I have to say it, exiting the trade is possibly the best way to play a poor performing wheel asset. Many times, after adjusting and the trade still isn’t working, it’s best to walk away. It’s also a bad habit of mine to try and make something work that just isn’t working. If you share a similar thought process, just know it’s probably better to throw in the towel and wait.

Now, if like me, you refuse to just walk away, there is something you can try. That is, doubling down.

Suppose you sold a put at the $29 strike and the next day SLV was trading down to $23. A staggering drop that honestly isn’t likely but in the market anything is possible. Rather than trying to roll the option way into the future and simultaneously occupying your capital. You may consider having the shares assigned at $29 and then write another put at the new lower price. This is why I like having enough capital to buy at least 200 shares.

Either way, you would be looking at a loss on the $29 put. By taking ownership of the shares, that loss may be mitigated should the market climb higher. Still, the old market adage applies, “the market can stay irrational longer than you can stay solvent.”

Personally, I like doubling down but it doesn’t mean I’m right.

Adjusting Poor Performers

Exiting or doubling down is also an adjustment. However, I wanted to separate that discussion so that this section was focused on adjusting the puts and calls themselves. Aka, rolling out or down. Anyone interested in this daily options trading strategy should become familiar with rolling.

That said, don’t forget that balancing act we completed when determining our target income versus our strike selection. That balancing act must be deployed here as well. Even at a loss if it means avoiding assignment or exercise at an unfavorable strike.

Rolling the position, for those unfamiliar, is just closing the existing option and reopening a new option. For example, if I sold short that $29 strike put and price fell to $23 I would have to look and see what premiums existed elsewhere. The primary objective of such a move is to obtain more time. The question is, if you had to roll out to 2 years to avoid a loss is it worth the time value. In my opinion, it isn’t and exiting or doubling down is the better play.

Regardless, rolling is an important function for a daily options trading strategy wheel trader. Some days or even weeks the market just won’t behave. Still, if you’re monitoring the positions each day it might be possible to avoid significant losses by rolling in a timely manner.

Final Thoughts

In closing, this daily options trading strategy is primarily focused on cashflow. Admittedly, SLV isn’t my preferred candidate but it does check all the boxes. If implied volatility were higher on SLV then the premiums may justify tackling this strategy on them. As of today, there just isn’t enough, in my opinion to make it worth the risk.

That said, if you do have enough capital to trade with the big boys then performing this strategy on SPY or QQQ would be more than acceptable. On either of those two assets a trader could easily go 3% out of the money and still have respectable premiums available. Still, the risk is considerably higher as well so it all comes back to finding the most appropriate underlying.

In the end, it’s up to you and your situation. If you’re interested in a daily options trading strategy but not wanting to just roll the dice on something like 0DTE trades then the daily wheel strategy might make sense. Moreover, if you’re already a wheel trader then you would have a leg up on new comers since you’ll already know most of the pitfalls to avoid.

Until the next post.

God bless,

Jeff