What are the best stocks to trade with the wheel strategy?
Asked 4 years ago
So far, I have learned that the wheel strategy is an options trading strategy and that it can allow me to gain a reliably consistent cash flow. However, to begin, I need to choose a handful of stocks. This is where my dilemma comes in: there are so many and I don't know which would work best with a wheel strategy. Any recommendations would be immensely helpful. Thanks!
Andia Rispah Igobwa
Tuesday, August 10, 2021
The best stocks to trade with the wheel strategy have a high beta and low volatility. Beta is a statistical measure of how much an individual asset moves in relation to the market as a whole.
It means that if most stocks are going down, your individual stock's risk is not extremely high - but if most stocks are going up, then your individual stock's risk is higher than average.
You want to steer clear of stocks with excessive volatility because they're prone to sudden drops without warning - also known as "black swan" events that can screw you over when it comes time for (derivative) payout calculations.
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