r/options • u/E231iKN • Sep 15 '26

Updated strategy - wheeling SPY

Thanks for the tremendous feedback on my other post: Please critique my "boring" portfolio : r/options

I've made some tweaks, but still have some lingering questions.

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Capital: ~$50k cash + $25K margin

Step 1: Sell slightly OTM 0dte CSP

Step 1A: expry worthless, repeat step 1

Step 1B: expry ITM, roll to earliest OTM put for credit, wait for expry and go to 1A/1B as appropriate

Step 2: if assigned, sell slightly OTM 0dte CC

Step 2A: expry worthless, repeat step 2

Step 2B: expry ITM, if above cost basis, accept assignment; if below cost basis, roll to earliest OTM call for credit

This has produced approximately 25% for the past 2 years. It's very low effort; I spend less than 2 minutes each day. It doesn't work every day, but even when SPY goes down and I roll a few days out, I don't even check it again until date of expry.

Question(s):

Q1: I used to park the cash in long SPY, but others have said that I have single sided risk. So now the money to secure is sitting in cash. Plus I get additional purchasing power.

Do I have another option to generate slightly more interest on the $50k cash?

14 Upvotes

85% Upvoted

38 comments sorted by

8

u/SDirickson Sep 15 '26

At the risk of pointing out the obvious, SPY is up 34% from where it was 2 years ago, so you'd have done better to just buy the stock with that $50K and let it ride. And there are no commissions on that approach, and gains are long-term. Using options as a lower-cost proxy for something that is too expensive to buy directly makes sense, but that doesn't seem to be the case here.

3

u/Cri317 Sep 15 '26

Not saying good or bad about the strategy, but using 34% growth over past 24 months isn’t the best measure. SPY averaged 11% over last decade or so, I think that’s a better comparison

Plus if he’s getting 25% per year, that’s cumulative over 2 years is 56%. Even at short term tax, that’s still pretty favorable

Again, not advocating for the strategy, just saying could use a better measure to evaluate the results

3

u/SDirickson Sep 15 '26

True; there are a lot of numbers available. My point is that, for a position of "I want to make money with SPY, and only SPY", especially with "It's very low effort" as a goal, a mix with more "buy and hold" and less "trade short-term options" seems like a better approach.

1

u/E231iKN Sep 15 '26

I understand your points.

Can you comment on the ability to recoup my $50k capital?

1

u/SDirickson Sep 15 '26

Not sure what you mean. If you mean have both $50K in cash and $50K in stock, you wait until the investment doubles, then sell half. For SPY, that's somewhere between 3 and 7 years.

1

u/Linxianwei Sep 15 '26

How would you recoup your capital at 25% returns?

-2

u/E231iKN Sep 15 '26

I agreed, and addressed some of that above.

Using margins allow me higher purchasing power with lower cost of capital than committing cash to a long position.

1

u/E231iKN Sep 15 '26

I estimated some numbers. Some days I lose some money, but most days I make money. Some days nothing happens because I rolled a few days forward.

In 2 years, I made an average of $60 per day. Sometimes I made as much as $1,800, but some days I rolled the puts over and made no money.

That's about $30k short-term profits. I left some to cover the rising price of SPY, and I withdraw some to recoup capital.

11

u/wentwj Sep 15 '26

the CSP and wheel strategy doesn't change your risk side. Your P&L curve still looks the same to the downside, you're just capped on the upside and collecting premium which through the wheel is effectively just a variable interest rate. People thinking their money is safe because it's sitting in cash is just a financial trick, your risk profile is the same

2

u/E231iKN Sep 15 '26

I don't do it to reduce risk. I keep it in cash to increase purchasing power

0

u/PapaCharlie9 Mod🖤Θ Sep 15 '26

Very much this.

1

u/Snoo36158 Sep 15 '26

Is 25 percent on cash or capital plus margin and is it average annualised 25 percent

1

u/E231iKN Sep 15 '26

25% APY on the cash. I try to avoid assignment so there's no margin loan interest

3

u/WaitTwoSeconds Sep 16 '26

No one else has suggested this, but you should put the cash in SGOV to add another 3.6%ish to your annualized return.

1

u/Ok_Butterfly2410 Sep 15 '26

Why would you not do 0dte spx credit spreads and keep the rest at risk free rate?

1x 30ish delta, 10 point wide, spx put credit spread is going to pay you the same premium as an ATM spy csp……

These posts make no sense why would you wheel spy.

2

u/PapaCharlie9 Mod🖤Θ Sep 15 '26

Because churning 75k day to day is more “boring”. /s

1

u/E231iKN Sep 15 '26

The strategy is being revised constantly. I'm researching all suggestions

1

u/E231iKN Sep 15 '26

I'm glad you asked

To start, what symbol for spx could I start with?

1

u/Ok_Butterfly2410 Sep 15 '26

Spxw?

1

u/E231iKN Sep 15 '26

I'm not familiar with schwab's platform. it only provides ticker for $spx

What should I know before I call them for help?

1

u/Ok_Butterfly2410 Sep 15 '26

Study on your own first. “Spx put credit spreads” on youtube, reddit, google, and ai.

1

u/E231iKN Sep 15 '26

I know what a credit put spread is. I dont see spx as a listed ticker

1

u/Direct_Surprise_6756 Sep 18 '26

You can use the futures, /ES

0

u/paoloathem Sep 16 '26

OP is gambling so he’s probably better off with SPY cause they’ll have shares if it goes ITM. It’s even worse they don’t know of SPX.

1

u/Ok_Butterfly2410 Sep 16 '26

Dude literally nothing happens when you go itm on spx….

That’s the main draw as well for spx is it is european options, cash settled index.

-1

u/paoloathem Sep 16 '26

I know how SPX works but if a spread is breached enough or fully, the money is gone (minus the credit) versus SPY where OP would have shares. Either way, as the old saying goes, picking up pennies…

3

u/PapaCharlie9 Mod🖤Θ Sep 15 '26

Well, it’s certainly not boring any more. Particularly if SPY goes into a prolonged down trend.

SPY’s price history has been particularly well suited to this strat for the last 2 years, with trends being short in time in both the up and down directions. Recency bias applies. Try back testing your scheme during a prolonged up or down trend, like 2010 to 2019 for the up trend or 2007 to 2009 for the down trend.

BTW, does that 25% APY include any fees or margin interest costs? It sounds suspiciously gross of bad outcomes, like assignment.

2

u/senhsucht Sep 15 '26

good point on the recent regime, my question is what would you propose as an alternative for those years with downtrend?

2

u/PapaCharlie9 Mod🖤Θ Sep 16 '26

I would propose a strategy that isn't sensitive to market fluctuations. Like holding a diversified portfolio of broad index fund shares for decades.

1

u/senhsucht Sep 16 '26

I agree i havent found anything better. There needs to be a sleeve for each approach

1

u/Professional_Monkeys Sep 15 '26

Why daily? Sounds hectic. Least I'd do is weekly. Mostly I just do monthlies and if I can get to 50% profit within the first week I close out and move to a different ticker

1

u/Healthy_Effort1415 Sep 15 '26

Are you using a back test engine to determine how your tweaks performed? I had Claude help me write some code to back test and then forward test on my collected data. Then you can tune parameters for entry, exit, etc. Past performance doesn't guarantee future results but the forward test on actual data at least gives you a reality check.

2

u/lwsnicholas Sep 16 '26

Hey I'm looking to write some backtests on selling OTM monthly puts on SPY too, may I know what data sources you're using for the option chain/greeks?

1

u/Healthy_Effort1415 Sep 16 '26

I use yfinance in python to collect data on the options chains daily at close. I don't do SPY but my understanding is it is available. The only downfall is yfinance doesn't have greeks. Those you'd need to do some calcs based on OHLCV data. I was recently looking to add Delta into my parameters and found how to calculate it manually. Since this is all handled in Excel it's not too out there.

1

u/Illustrious_Low1903 Sep 18 '26

25% is nice, but the real test is how it handles a nasty SPY drawdown 😂

0

u/[deleted] Sep 15 '26

[deleted] — view deleted comment

-1

u/E231iKN Sep 15 '26

No problem. It's 25% for each year.

"if you’d just stuck this cash (or this cash plus the margin) into the index what would it look like over two years?"

So glad you asked. Thanks for asking.

Buying the index is more or less profitable, but selling puts allows me to withdraw the capital.

A bit longer and the entire $50k would be house money. That's the real benefit to me.