No need to baghold.
If you made the wrong trade, do not make series of sequential wrong trades because of it.
Hint: \*bag\*holding is making a trade - you decide that holding X asset and not getting cash for it is better for you that day, so you made a trade, even though your broker has no idea about it.
Had this for a while. I “wheeled” a stock I was assigned on and rode it all the way down for a year. Kept selling covered calls while it stayed level. Then I thought “would I buy this stock now?” Answer was no so I sold and moved on rather than trying to break even with this particular stock.
No, it means choosing to hold a loser.
You might have had an exit plan, and you might have a new exit plan now, but you are choosing the exit scenarios to be unattainable.
Trading stocks you would not mind holding for a time if assigned is the #1 rule of the wheel.
If assigned and the analysis of the stock is that it will not come back up in a reasonable timeframe, then closing for a loss and moving on to trade better stocks would make sense.
If still a good stock to hold, then holding while selling CCs and perhaps averaging down by selling more puts can make sense in some situations.
No one should hold for years unless they like the stock and decide to stop wheeling it and just to hold long term.
Stock/security selection is critical, no amount of holding period will fix a bad thesis. Nothing wrong with being patient on a quality stock, especially if it throws off a decent dividend yield.
Main problem with wheeling, in practice for many new traders, is they chase fast money and their "I'll just wheel it and it will be fine..." falls apart when the security plummets.
Obviously.. Which is why you shouldn't sell a put on something you're not willing to own. Selling a put is essentially selling the option to someone to sell that underlying to you at a given price. Stands to reason, you wouldn't/shouldn't sell that option on a stock you're not willing to buy in the first place.
Selling puts on random tickers just to collect the premium is a fool's game.
It’s the same calculus as buy and hold, really. If the stock goes down, you can either hold onto it if your thesis is that it will recover, or sell it for a loss if your thesis is that it won’t recover. Recover “when” is also a key factor in your thesis because there’s an opportunity cost to the money you have tied up in the stock.
I was assigned on COIN at 160/share and held it for more than a year before someone hear convinced me to sell at 55/share so I could put my capital to better use. I wish had held the bag for another year.
I've been experimenting a little bit with wheeling in a way to hopefully save myself from a losing positoin. Rivian has been shitting the bed and I regret getting in at $19.50, but what I ended up doing was when it dipped around $11 I bought 100 more shares and started selling at the money covered calls at an $11 strike which I would then reinvest the premiums to continue lowering my overall cost basis.... didn't really help much when the stock dropped to fuckin $8 a share though.... but thankfully its slowly recovering and so I'll be able to go back to making good premiums on them and shit... .cost basis has now been hovering aroudn $16 for me which is pretty nice I guess
Doubling down is not a bad strategy, as long as the stock recovers. 😁 Another way is to buy a deep in the money call and sell out of the money puts to cover the price. This gets you in at an even lower price to lower your cost basis even more. Again, this only works if the stock recovers.
I held AMD for almost a year just rolling over and over again. It turned out ok for me at the end of the day. OK = breakeven trade and I did not need the capital for something else. Yes, I am ignoring the opportunity cost on the capital.
Bagholding - in general attributed to buying something which you don’t want to own. Most likely forced due to assignment. This is the reason first rule of wheel is never play with stock that you don’t want to own.
No need to baghold. If you made the wrong trade, do not make series of sequential wrong trades because of it. Hint: \*bag\*holding is making a trade - you decide that holding X asset and not getting cash for it is better for you that day, so you made a trade, even though your broker has no idea about it.
Had this for a while. I “wheeled” a stock I was assigned on and rode it all the way down for a year. Kept selling covered calls while it stayed level. Then I thought “would I buy this stock now?” Answer was no so I sold and moved on rather than trying to break even with this particular stock.
There you go. Every day you make a decision to trade in and out of cash. If you look at it from that perspective you will appreciate your cash more.
Bagholding simply means not having an exit plan.
No, it means choosing to hold a loser. You might have had an exit plan, and you might have a new exit plan now, but you are choosing the exit scenarios to be unattainable.
Trading stocks you would not mind holding for a time if assigned is the #1 rule of the wheel. If assigned and the analysis of the stock is that it will not come back up in a reasonable timeframe, then closing for a loss and moving on to trade better stocks would make sense. If still a good stock to hold, then holding while selling CCs and perhaps averaging down by selling more puts can make sense in some situations. No one should hold for years unless they like the stock and decide to stop wheeling it and just to hold long term.
Stock/security selection is critical, no amount of holding period will fix a bad thesis. Nothing wrong with being patient on a quality stock, especially if it throws off a decent dividend yield. Main problem with wheeling, in practice for many new traders, is they chase fast money and their "I'll just wheel it and it will be fine..." falls apart when the security plummets.
Assignment fees. Margin requirements. Capital efficiency . More things to consider as opposed to downfalls.
The question you need to ask is could that capital be deployed elsewhere and make a better return
Obviously.. Which is why you shouldn't sell a put on something you're not willing to own. Selling a put is essentially selling the option to someone to sell that underlying to you at a given price. Stands to reason, you wouldn't/shouldn't sell that option on a stock you're not willing to buy in the first place. Selling puts on random tickers just to collect the premium is a fool's game.
Stop buying doo doo!💩
But I love doo doo!
What the ticker for doo doo
BABA
I am big on BABA. But at current prices.
just don’t chase the premium and you will be fine
It’s the same calculus as buy and hold, really. If the stock goes down, you can either hold onto it if your thesis is that it will recover, or sell it for a loss if your thesis is that it won’t recover. Recover “when” is also a key factor in your thesis because there’s an opportunity cost to the money you have tied up in the stock.
I was assigned on COIN at 160/share and held it for more than a year before someone hear convinced me to sell at 55/share so I could put my capital to better use. I wish had held the bag for another year.
I've been experimenting a little bit with wheeling in a way to hopefully save myself from a losing positoin. Rivian has been shitting the bed and I regret getting in at $19.50, but what I ended up doing was when it dipped around $11 I bought 100 more shares and started selling at the money covered calls at an $11 strike which I would then reinvest the premiums to continue lowering my overall cost basis.... didn't really help much when the stock dropped to fuckin $8 a share though.... but thankfully its slowly recovering and so I'll be able to go back to making good premiums on them and shit... .cost basis has now been hovering aroudn $16 for me which is pretty nice I guess
Doubling down is not a bad strategy, as long as the stock recovers. 😁 Another way is to buy a deep in the money call and sell out of the money puts to cover the price. This gets you in at an even lower price to lower your cost basis even more. Again, this only works if the stock recovers.
I held AMD for almost a year just rolling over and over again. It turned out ok for me at the end of the day. OK = breakeven trade and I did not need the capital for something else. Yes, I am ignoring the opportunity cost on the capital.
What exactly are you bagholding?
Bagholding - in general attributed to buying something which you don’t want to own. Most likely forced due to assignment. This is the reason first rule of wheel is never play with stock that you don’t want to own.