I have started a new retirement journey where I plan to increase my retirement returns using what I call the Retirement Options Wheel Strategy. I have been earning over $2k a month on average in my brokerage selling options using safe option strategies. I have been able to accomplish this for over 14 months. In short, I have invested in securities that have good financials and are not too volatile. Also, I have used 20 Delta and 30 – 60 day expirations for most of my trades. Using these factors, I have achieved over a 95% success rate with my trades. Here are all the guidelines I have used for my trading. These are flexible but I typically try to stay close.
- Strike price of 10% above (Call) or below (Put) current price.
- 30 – 60 Day Expiration.
- 20 Delta for the contract. (.20 for calls and -.20 for puts) This is an 80% probability of expiring out of the money.
- Close if 90% profitability.
- If good premium and enough cash trade 2 contracts.
- Closing Guidelines
o Roll if in or near the money. Be sure that I can earn a premium with a better strike price.
o Allow assignment if cannot roll and investment is still good.
o Close if cannot roll and assignment is not good. Most likely at a loss.
Now it is time to turn my focus to my Retirement Accounts. Since I do not have to worry about profits and taxes, I believe I can make even more than what I did in my brokerage accounts. I changed my options trading access in my Schwab Roth Conversion IRA account to allow for options trading with margin. I needed the margin to allow me to do Vertical Put Credit Spreads and have the margin calculated correctly when using the outer option arm.
For my retirement account trading, I am going to use the same factors as above with the following exceptions.
- 25 – 30 Delta. Going to take a bit more risk.
- Strike price of 5 – 10% above (Call) or below (Put) current price.
- Be more willing to allow for assignments.
I am using the Options Wheel Strategy in the Roth account. I added the Retirement to the beginning of it to designate that it is being used with a retirement account. The way I use the Retirement Options Wheel Strategy is to first sell a put option on good quality security. This can be a stock or an ETF. In short, I look for good companies that not only pay dividends but increase them steadily over time. Also, they need to have good financials.
Next, the put option will expire, be assigned, or be closed. If it expires or is closed, then I will sell another put and gain more premium. If it is assigned, then I will sell a covered call using the factors above and again earn some premium. Just like the put the covered call will expire, be assigned, or be closed. In a sense, it is like a wheel that keeps spinning. However, in a retirement account, It can spin even faster.
In my brokerage accounts, I have earned around .5% per month or 6% a year. My hope is to double this in my retirement account and earn at least 1% monthly. This does not include any appreciation of my existing investments. For instance, in my Roth IRA, I have been averaging about 9.5% yearly. Combined this would give me over a 20% return. With this kind of return, I could double the account in a couple of years. Using the rule of 72 it would be 3.6 years. (72/20(yearly return) = 3.6)
Below is a YouTube video where I talk more about this and show you my initial results. As of writing this post I have been able to achieve the 1% monthly. Please check back often to learn how I am doing. If you want to try selling options, then take a look at my initial post on how to get started. Also, if you want to access my trades, spreadsheets and special content then become a patron.
Blessings and Happy Investing!
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