Hello, I've been running the wheel for some time and have learned a lot, but I have some questions I'm not able to work out myself. Also, although I know certain rules of this strategy, it's difficult for me to implement them… so I probably need a nudge from you guys:
1. It's recommended to sell CCs at your breakeven strike (assigned price less the premium received from selling the CSP). But since you usually sell CCs weekly and CSPs at \~45 DTE, this can mean that premium earned over a much longer period (the CSP) gets wiped out by premium earned for a single week. For example, today I sold 145 calls on SPCX expiring 31 July for USD 224 in premium —145 being my average assigned price. Had I sold at my breakeven (140), I could have collected a higher premium (USD 330, so USD 100 more), but in case of assignment I would lose the collected CSP premium of USD 530. I understand that if I'm not assigned, selling CCs for more premium lets me compound — but it still feels tricky to me.
2. It's recommended to close CSPs at 50–60% profit, and I struggle with this. And because of it, my assignment rate is higher than I'd like... But my (probably flawed) thinking is that in such cases the position is already so safe that harvesting the rest (up to 80–85%) is much safer than opening a new position at a higher initial delta.
3. How do you deal with the earnings period? Do you choose weekly expiries to step out of earnings, trade ETFs instead, etc.?
4. When selling CSPs on individual names, how do you deal with the recent low-correlation environment?
5. What is considered a good assignment rate?
6. How do you deal with bias? You're supposed to wheel stocks you'd be happy to hold, but I find myself doing worse with stocks I genuinely like than with stocks I don't like but chose them based objective metrics.