Wealth Building With Options

Dan shifts from cash-secured put “double threat” setups to covered calls, especially the skate objective (keeping premium without assignment). He explains why technical analysis is often the most practical way to add edge to covered call strike selection, particularly by using resistance, momentum tools like RSI and realistic range expectations. He also walks through how to sanity-check any setup with annualized yield and what to do if the stock runs through your strike (accept assignment vs. roll proactively). Key Topics Covered calls vs. cash-secured puts: same structure, different investor use cases Planning covered calls by objective: skate (avoid assignment) vs. trade (sell stock) Why technical analysis is especially useful for covered call skate trades Resistance as a “speed bump” that can override pure probability distributions Momentum tools for topping signals: RSI (overbought pullback, divergences) and ADX Range expectations using volatility and why it’s informational, not true edge De-annualizing volatility to estimate a short-term range (standard deviation over DTE) Why “84% probability” strike-setting can be arbitrary and premium congruent Limitations of implied vs. historical volatility for strike selection Range indicators (Bollinger Bands/Keltner Channels): why Dan found them lacking Introducing Dan’s custom tool: PAS (Price History Anchored Strike) indicator Case study walkthrough: aligning resistance + PAS band, then validating with yield Decision tree when strike gets threatened: accept assignment vs. roll up / up-and-out Key Takeaways Resistance can provide edge. It often repels advances more than a purely random (lognormal) model would suggest, making it useful for protecting covered calls. TA beats “probability trivia.” Volatility-based strike placement mostly tells you odds that are already reflected in premium; resistance/RSI can add an extra “bump in the road.” Annualized yield is the filter. Even if the strike is well-placed, the covered call still needs to pay enough to justify the trade. Volatility estimates have limits. Implied volatility is heavily supply/demand-driven, and historical volatility may not match the coming regime. Use both cautiously. Strike selection is never exact. You’ll always round to listed strikes; the goal is stacking confirmations (e.g., resistance + PAS range). Management matters when the stock pushes through. If you want to keep shares, rolling early (often once ITM) is the proactive move; if not, assignment can be a clean exit. Know your outcomes in advance. Skate objective traders should define when they’ll roll; trade objective traders should focus on the if-called transaction return. Connect Learn more about host Dan Passarelli and Market Taker Mentoring: MarketTaker.com Get exclusive content including video trade walk-throughs, Dan's actual trades, monthly AMA webinars and more: wealthbuildingpodcast.com Subscribe on your preferred platform and leave a review to help more traders discover the show. Disclosure: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD) which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.   Trumpet Trumpet Fanfare by bevibeldesign -- https://freesound.org/s/350428/ -- License: Creative Commons 0 Wah Wah Wah Wah wah trumpet failed joke punch line.wav by Doctor_Jekyll -- https://freesound.org/s/240195/ -- License: Attribution 4.0 Dramatic Drum Roll dramatic drum roll.wav by ingsey101 -- https://freesound.org/s/51401/  -- License: Attribution 3.0

Dan tackles a common complaint he hears from traders: “The wheel doesn’t work.” His take is straightforward: When wheel trades are placed without clear standards for strike selection, premium adequacy and outcome planning, they can absolutely “suck.” He shows how to build better wheel setups by using annualized return metrics (especially skate yield) and by designing trades where either outcome, skating or getting assigned, can be a win.  Key Topics Why many wheel trades fail: missing key nuances in setup and expectations Moving from “what do I do if X happens?” to “what outcome do I get if X happens?” The importance of minimum premium vs. stock price (and why a blanket rule won’t work) Using annualized returns to compare trades across different timeframes Cash-secured puts from first principles: premium as ROI on cash set aside Skate return on cash and skate yield as core wheel decision tools The “double threat” concept: designing puts where both skating and assignment are favorable Selecting put strikes using valuation targets (e.g., PE-based price targets) or support levels Picking expirations by calculating and comparing skate yield across multiple cycles Why far OTM puts often produce poor ROI despite still carrying meaningful risk Using the cumulative discount effect to improve future entry flexibility after repeated skates Key Takeaways Wheel trades don’t fail; bad wheel setups do. Most “the wheel sucks” stories trace back to poor strike/premium decisions and unclear objectives. Annualized yield is the best reality check. It keeps you from accepting premiums that look “fine” in dollars but are weak as an investment return. Skate yield is a power metric for cash-secured puts. Premium ÷ strike (annualized) lets you compare puts to other yield instruments like CDs and bonds. You don’t need trades to be repeatable for annualized returns to be useful. The point is selecting each unique opportunity with an attractive risk-adjusted return. Aim for “double win” setups. The best put trades can be structured so if you skate, you earn a strong yield on reserved capital, and if you get assigned, you buy shares at a price your analysis already says is attractive. Ignore post-trade regret about upside. If you wouldn’t buy the stock at today’s price, it’s not meaningful to lament “money left on the table.” Avoid the far-OTM trap. Low premium can create a poor ROI even if assignment risk feels “less likely.” Connect Learn more about host Dan Passarelli and Market Taker Mentoring: MarketTaker.com Get exclusive content including video trade walk-throughs, Dan's actual trades, monthly AMA webinars and more: wealthbuildingpodcast.com Subscribe on your preferred platform and leave a review to help more traders discover the show. Disclosure: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD) which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.   Trumpet Trumpet Fanfare by bevibeldesign -- https://freesound.org/s/350428/ -- License: Creative Commons 0 Wah Wah Wah Wah wah trumpet failed joke punch line.wav by Doctor_Jekyll -- https://freesound.org/s/240195/ -- License: Attribution 4.0 Dramatic Drum Roll dramatic drum roll.wav by ingsey101 -- https://freesound.org/s/51401/  -- License: Attribution 3.0

Dan lays out the core performance metrics that help wheel traders evaluate, compare, and improve covered calls and cash-secured puts. He explains why isolating the option component of returns matters and why annualizing turns “apples to apples.” He also introduces a powerful long-term concept, the cumulative discount effect, where repeated premium collection steadily lowers your effective risk over cycles. Key Topics Why measuring trade performance leads to better decision-making Separating the option “yield” from the stock’s P&L noise Covered call metrics: static return, annualized yield, if-called return Covered call reference points: breakeven/cost basis and indifference point Why time value (extrinsic) is the key input in these formulas Cash-secured put metrics: skate return on cash and annualized skate yield Cash-secured put reference points: breakeven/cost basis and indifference point Comparing cash-secured put yield to other investments (CDs, bonds, etc.) The cumulative discount effect across wheel cycles Why cumulative premium can reduce risk and improve Sharpe Ratio Clarifying “cost basis” vs. tax cost basis Key Takeaways Metrics create clarity. You can’t improve what you don’t measure, especially in a strategy built on small edges. Use time value, not total premium, for true option yield. Extrinsic is what decays and what you’re paid to harvest. Annualize to compare fairly. Annualized yield lets you compare different expirations and even different underlyings. Know your outcome scenarios. Static/skate metrics assume no assignment; if-called metrics assume assignment—both matter. Cumulative discount is the long-game advantage. Over cycles, repeated premiums lower effective entry price, reduce risk and can improve risk-adjusted returns. “Cost basis” here is conceptual, not tax guidance. Treat these as trading metrics—not tax accounting. Connect Learn more about host Dan Passarelli and Market Taker Mentoring: MarketTaker.com Get exclusive content including video trade walk-throughs, Dan's actual trades, monthly AMA webinars and more: wealthbuildingpodcast.com Subscribe on your preferred platform and leave a review to help more traders discover the show. Disclosure: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD) which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.   Trumpet Trumpet Fanfare by bevibeldesign -- https://freesound.org/s/350428/ -- License: Creative Commons 0 Wah Wah Wah Wah wah trumpet failed joke punch line.wav by Doctor_Jekyll -- https://freesound.org/s/240195/ -- License: Attribution 4.0 Dramatic Drum Roll dramatic drum roll.wav by ingsey101 -- https://freesound.org/s/51401/  -- License: Attribution 3.0

Dan takes a critical but balanced look at backtesting and why it often leads traders astray, especially when it comes to strike and expiration selection for covered calls and cash-secured puts. Drawing on decades of experience and firsthand work with traders and developers, Dan explains why backtesting tools have structural limitations, how those limitations create misleading conclusions, and why discretion, objectives and real-world market structure still matter far more than “optimal” backtested metrics. Key Topics What backtesting is—and what it’s actually good for Why strike and expiration selection matter so much for edge The hidden limitations of backtesting platforms Why support and resistance can’t be meaningfully backtested The subjectivity of fundamental analysis and valuation models Common backtesting strike rules: delta, % moneyness and standard deviation Why no single delta or strike distance can be “best” Rounding errors and incomplete option-chain data Entry/exit limitations caused by expensive market data Unintentional data fitting based on test time horizons How backtesting can create false confidence and bad habits Using objectives (skate vs. trade) to guide real-world strike selection Key Takeaways Backtesting is useful—but incomplete. It can inform strategy behavior, but it cannot capture discretion, context or market structure. Strike “optimization” is often an illusion. Apparent outperformance by a specific delta or distance is usually the result of rounding, data constraints or time-period bias. Markets don’t reward mechanical precision. If one delta were objectively superior, the options pricing model itself would be broken. Support, resistance and fundamentals matter but can’t be coded cleanly. These human-driven factors provide real edge but resist automation. Objectives should drive decisions. Use technical levels for skate trades and fundamentals for trade-objective setups. You’ll never get it perfectly right—and that’s OK. Adjustments and rolling are part of the wheel, not failures. Connect Learn more about host Dan Passarelli and Market Taker Mentoring: MarketTaker.com Get exclusive content including video trade walk-throughs, Dan's actual trades, monthly AMA webinars and more: wealthbuildingpodcast.com Subscribe on your preferred platform and leave a review to help more traders discover the show. Disclosure: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD) which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.   Trumpet Trumpet Fanfare by bevibeldesign -- https://freesound.org/s/350428/ -- License: Creative Commons 0 Wah Wah Wah Wah wah trumpet failed joke punch line.wav by Doctor_Jekyll -- https://freesound.org/s/240195/ -- License: Attribution 4.0 Dramatic Drum Roll dramatic drum roll.wav by ingsey101 -- https://freesound.org/s/51401/  -- License: Attribution 3.0

Dan ties the wheel strategy to New Year’s resolutions, emphasizing that the wheel only works when it’s traded consistently and in cycles. He explains how to systematize the process so it fits into real life—reducing friction, minimizing time demands and making long-term wealth building sustainable. Key Topics Why the wheel succeeds only as a cyclical strategy Commitment to process over individual trades Fitting the wheel into your daily or weekly schedule Stock selection and trade execution timing Managing expirations, assignments and recycling trades Minimizing adjustments and ongoing maintenance Using planning and automation to save time Systemizing the wheel for long-term results Key Takeaways One-off trades don’t build wealth—cycles do. The power of the wheel comes from repeating the process consistently over time. Systemization is essential. A clear, repeatable routine makes the wheel sustainable and effective. The wheel must fit your life. When the strategy aligns with your schedule, it becomes manageable and even enjoyable. Time requirements are modest. With planning, most wheel maintenance takes minutes—not hours. Consistency beats intensity. A steady, methodical approach delivers better long-run results than sporadic effort. Make it a resolution worth keeping. This is the year to commit to a structured, cyclical investing process. Connect Learn more about host Dan Passarelli and Market Taker Mentoring: MarketTaker.com Get exclusive content including video trade walk-throughs, Dan's actual trades, monthly AMA webinars and more: wealthbuildingpodcast.com Subscribe on your preferred platform and leave a review to help more traders discover the show.   Disclosure: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD) which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.   Trumpet Trumpet Fanfare by bevibeldesign -- https://freesound.org/s/350428/ -- License: Creative Commons 0 Wah Wah Wah Wah wah trumpet failed joke punch line.wav by Doctor_Jekyll -- https://freesound.org/s/240195/ -- License: Attribution 4.0 Dramatic Drum Roll dramatic drum roll.wav by ingsey101 -- https://freesound.org/s/51401/  -- License: Attribution 3.0

Dan puts implied volatility in its proper place: It’s not the single most important factor in wheel trading, but it meaningfully improves outcomes over time. Using a field-goal analogy, Dan explains how volatility analysis adds a “little edge” on each trade that compounds across many cycles. He then goes deeper into when volatility matters most, plus a practical framework for evaluating whether selling puts or calls into earnings creates a favorable “sweet spot.” Key Topics Why implied volatility is not the most important thing—but still important The 1-2-3 volatility analysis for identifying overpriced options Active vs. passive wheel trading and volatility requirements The wheel hierarchy: price movement, theta decay, then volatility Risk premium and why options tend to be overpriced over time “When in doubt, palms out” and the premium-seller mindset Volatility regimes and how prolonged low IV changes decisions When extremely high IV is a warning sign, not an opportunity Why IV matters less for ultra-short DTE options Earnings as a volatility event: when to avoid vs. exploit Using break-even and indifference points to find the earnings “sweet spot” Using puts to enter or calls to exit around earnings Key Takeaways IV is an edge, not the core driver. Underlying price movement and theta are usually more influential in wheel outcomes, but IV adds incremental advantage that compounds over time. Active and passive wheel traders use IV differently. Active traders may require confirmation that options are overpriced; passive traders may prioritize keeping the cycle going and capturing the long-run risk premium. Humility matters in volatility forecasting. You can’t know with certainty whether options are mispriced until after expiration, so rules-based processes help reduce overconfidence. Regime awareness beats day-to-day noise. A few low-IV days are normal; weeks or months of a pattern can justify sitting out or adjusting tactics, especially in strong rebound “freight train” markets. Extremes cut both ways. Slightly high IV can be attractive for selling, but extremely high IV may signal risk you don’t understand. Earnings setups can be evaluated objectively. Compare historical earnings gaps with the option’s break-even/indifference “sweet spot” to judge whether premium meaningfully compensates for the expected move. If selling calls to exit stock into earnings, assignment probability matters. At-the-money or slightly in-the-money calls can improve assignment odds and provide more downside cushion, but the true advantage comes from time premium, not intrinsic value. Connect Learn more about host Dan Passarelli and Market Taker Mentoring: MarketTaker.com Get exclusive content including video trade walk-throughs, Dan's actual trades, monthly AMA webinars and more: wealthbuildingpodcast.com Subscribe on your preferred platform and leave a review to help more traders discover the show.   Disclosure: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD) which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.   Trumpet Trumpet Fanfare by bevibeldesign -- https://freesound.org/s/350428/ -- License: Creative Commons 0 Wah Wah Wah Wah wah trumpet failed joke punch line.wav by Doctor_Jekyll -- https://freesound.org/s/240195/ -- License: Attribution 4.0 Dramatic Drum Roll dramatic drum roll.wav by ingsey101 -- https://freesound.org/s/51401/  -- License: Attribution 3.0

Dan explains why wheel traders must think about technical analysis differently from momentum or breakout traders. Using a Home Depot analogy, Dan shows how the right tool for the job matters—especially when selecting indicators for skate-objective trades. He dives into oscillators (with a focus on RSI) and introduces a new strike-selection concept he’s developing. Key Topics Why trends and momentum are often the enemy of wheel traders Using technical analysis to reduce trades per wheel cycle Choosing the right indicators for skate-objective trades Oscillators and how they differ from breakout indicators Deep dive into the Relative Strength Index (RSI) Overbought and oversold signals for covered calls and cash-secured puts RSI divergences and what they signal for wheel traders Introduction to the PAS (Price-history Anchored Strike) indicator Why wheel traders avoid “trendy” stocks Overview of volatility analysis as part of the options trader’s trifecta Key Takeaways Wheel traders don’t want momentum. Strong trends often force rolls, increase trade count and slow down wheel cycles. Technical analysis should reduce activity, not increase it. The goal is fewer trades per cycle, not more signals. Oscillators are better tools for wheel traders. Indicators like RSI help identify waning momentum rather than breakouts. RSI can improve strike selection. Overbought and oversold reversals—and divergences—can increase the odds of skating successfully. Indicators don’t predict the future. They provide a small statistical edge when used correctly. Volatility matters as much as price. Understanding whether options are overpriced or underpriced is critical for consistent income strategies. Connect Learn more about host Dan Passarelli and Market Taker Mentoring: MarketTaker.com Get exclusive content including video trade walk-throughs, Dan's actual trades, monthly AMA webinars and more: wealthbuildingpodcast.com Subscribe on your preferred platform and leave a review to help more traders discover the show. Next Episode Preview: Next time, Dan goes deeper into volatility analysis, expanding on how wheel traders can evaluate implied volatility, historical volatility, and upcoming catalysts to improve covered call and cash-secured put decisions.   Disclosure: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD) which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.   Trumpet Trumpet Fanfare by bevibeldesign -- https://freesound.org/s/350428/ -- License: Creative Commons 0 Wah Wah Wah Wah wah trumpet failed joke punch line.wav by Doctor_Jekyll -- https://freesound.org/s/240195/ -- License: Attribution 4.0 Dramatic Drum Roll dramatic drum roll.wav by ingsey101 -- https://freesound.org/s/51401/  -- License: Attribution 3.0

Dan demystifies one of the most misunderstood areas of technical analysis: support and resistance. Rather than treating these levels as “magic lines on a chart,” Dan explains the market mechanics behind them—how real buy and sell orders, supply and demand, and human decision-making actually move prices.  Key Topics Why support and resistance are commonly misunderstood Technical analysis as a map of human behavior (price, not value) The basics of market mechanics: bids, asks and order size How supply and demand move prices tick-by-tick How horizontal support and resistance levels are created Why price levels hold—and the three main reasons they break Moving averages (SMA/EMA) as dynamic support and resistance Why the 200-day moving average matters to institutions “Death cross” and “golden cross” and what they signal Applying support/resistance to wheel strike selection for skate trades Key Takeaways Support and resistance aren’t magic. They reflect real buying and selling pressure created by market participants. Technical analysis explains price behavior, not valuation. It tracks what price and volume did—and how traders reacted. Prices move through order flow. Buyers absorb offers to push price up; sellers take out bids to push price down. Support/resistance can fail for predictable reasons. Levels break when supply/demand overwhelms the other side, participants finish their trades or new information changes valuation inputs. Moving averages can become self-reinforcing levels. Long-term averages like the 200-day influence institutional decisions and can behave like support or resistance. Wheel traders can use these levels to improve skate trades. Support can inform cash-secured put strikes; resistance can inform covered call strikes. Connect Learn more about host Dan Passarelli and Market Taker Mentoring: MarketTaker.com Get exclusive content including video trade walk-throughs, Dan's actual trades, monthly AMA webinars and more: wealthbuildingpodcast.com Subscribe on your preferred platform and leave a review to help more traders discover the show. Next Episode Preview: Next time, Dan continues building on technical analysis for wheel traders—going deeper into how to apply support, resistance and key chart-based levels to choose strikes that improve the probability of skating without assignment.   Disclosure: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD) which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.   Trumpet Trumpet Fanfare by bevibeldesign -- https://freesound.org/s/350428/ -- License: Creative Commons 0 Wah Wah Wah Wah wah trumpet failed joke punch line.wav by Doctor_Jekyll -- https://freesound.org/s/240195/ -- License: Attribution 4.0 Dramatic Drum Roll dramatic drum roll.wav by ingsey101 -- https://freesound.org/s/51401/  -- License: Attribution 3.0

Dan breaks down the true “secret sauce” of successful wheel trading: pairing the right objective (trade vs. skate) with the right type of analysis (fundamental vs. technical). He demonstrates how to reverse-engineer strike prices using dividend yields and valuation metrics and walks through a real example using Verizon (VZ). Key Topics Defining the skate objective vs. the trade objective Why trade objective trades pair naturally with fundamental analysis Why skate objective trades pair naturally with technical analysis How to reverse-engineer strike prices using target dividend yields How to set strike prices using target P/E ratios Real-world example: Verizon (VZ) dividend and valuation analysis When to wait for better pricing or volatility before selling puts Preview of using support and resistance for skate trades Key Takeaways Every wheel trade needs a single, clear objective. Choose either skate (avoid assignment) or trade (seek assignment) to stay consistent and intentional. Match your analysis to your objective. Use fundamentals for trade-objective entries and technicals for skate-objective premium selling. Reverse-engineer your strike prices. Start with the yield or valuation you want, determine the stock price that achieves it, and choose the strike accordingly. Premium can tweak your effective entry price—but don’t lose the plot. Premium helps refine entry, but fundamentals should guide the trade. Wheel trading can be “almost win–win,” but risk still exists. Assignment locks in value; non-assignment yields premium—but price risk remains. Conservative income plays can complement growth positions. High-yield value names can balance more aggressive holdings. Connect Learn more about host Dan Passarelli and Market Taker Mentoring: MarketTaker.com Get exclusive content including video trade walk-throughs, Dan's actual trades, monthly AMA webinars and more: wealthbuildingpodcast.com Subscribe on your preferred platform and leave a review to help more traders discover the show. Next Episode Preview: Next time, Dan digs deeper into technical analysis for skate-objective trades, focusing on how horizontal support and resistance can help identify strike prices where the stock is less likely to move—boosting your confidence and consistency when selling premium.   Disclosure: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD) which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.   Trumpet Trumpet Fanfare by bevibeldesign -- https://freesound.org/s/350428/ -- License: Creative Commons 0 Wah Wah Wah Wah wah trumpet failed joke punch line.wav by Doctor_Jekyll -- https://freesound.org/s/240195/ -- License: Attribution 4.0 Dramatic Drum Roll dramatic drum roll.wav by ingsey101 -- https://freesound.org/s/51401/  -- License: Attribution 3.0

Dan compares buying stocks to buying a dry cleaning business to demystify fundamental investing. Learn how value investors like Warren Buffett evaluate companies, and why understanding P/E ratios, earnings, and dividends can help you select better strike prices for your wheel trades. Key Topics The dry cleaner analogy: why buying stock is just like buying a business P/E ratios: what they reveal when comparing competitors Intrinsic value vs. market price Earnings (EPS): quarterly vs. trailing twelve months Dividend mechanics and dividend yield Using fundamental metrics to set strike prices for wheel trades Why the market isn't as efficient as you think Key Takeaways You actually own the business. When you buy stock, you own a proportional share of that company's revenue—it's literally your money. Dividend investors think backwards. While most people chase rising stocks, dividend investors wait patiently for prices to fall so they can lock in higher yields. Price isn't value. The stock market often disconnects from intrinsic value—that's where opportunities hide. Your fundamentals matter for strike selection. Understanding earnings and dividend yield can help you choose more strategic strike prices for covered calls and cash-secured puts. Connect Learn more about host Dan Passarelli and Market Taker Mentoring: MarketTaker.com Get exclusive content including video trade walk-throughs, Dan's actual trades, monthly AMA webinars, and more: wealthbuildingpodcast.com Subscribe on your preferred platform and leave a review to help more traders discover the show.   Disclosure: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD) which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.   Trumpet Trumpet Fanfare by bevibeldesign -- https://freesound.org/s/350428/ -- License: Creative Commons 0 Wah Wah Wah Wah wah trumpet failed joke punch line.wav by Doctor_Jekyll -- https://freesound.org/s/240195/ -- License: Attribution 4.0 Dramatic Drum Roll dramatic drum roll.wav by ingsey101 -- https://freesound.org/s/51401/  -- License: Attribution 3.0

Episode Summary In this conversation, Dan sits down with performance coach and former trader Denise Shull, author of Market Mind Games and the real-life inspiration for Wendy Rhoades on Billions. Denise explains why the old mantra “take the emotion out of trading” is scientifically wrong—and how learning to work with your emotions, instead of against them, can dramatically improve your decision-making. From intuition and regret to boredom, ADHD and market regime changes, this episode redefines what it means to be a “disciplined” trader. In This Episode, You’ll Discover: Why every decision requires emotion How modern neuroscience shows that perception is prediction—and that your brain is constantly asking, “Is this good or bad for me?” before you ever place a trade. Emotions as data—not distractions The difference between “integral” emotions (about the trade and market) and “incidental” emotions (about you, your P&L, identity and history), and why separating the two is a core trading edge. How to use intuition without going “on tilt” Why true intuition is unconscious pattern recognition built from experience (like a chef knowing a steak is done by sight) and when “I feel good about this trade” is useful versus dangerous. A practical method to blend logic and gut feel Denise’s 1–7 conviction/emotion scale, how granular emotional language improves performance and how to consciously factor “how much do I really believe this?” into your trading process. The real role of regret and how slumps start Why trying to “stay positive” can backfire, how unprocessed regret leads to trading slumps and how to use negative emotions to actually improve instead of burying them. Cutting the worst 5% of your trades How recognizing fear of future regret and choosing your “flavor of regret” can help you avoid revenge trades, impulse trades and the handful of decisions that wreck your year. Managing boredom and ADHD tendencies Practical ways traders can keep boredom from morphing into overtrading—by defining time frames, having intentional breaks and non-trading activities, and challenging the myth that you must always be in the market. Adapting to market regime changes How to think about market environments like different “genres of music,” why you don’t need to catch the exact top or bottom and how ego and the need to feel smart can sabotage regime shifts. The one daily practice Denise recommends The simple but powerful question—“What am I feeling and why?”—and how regularly sorting feelings into “about me” vs. “about the market” aligns you with how the human brain actually works. About Our Guest – Denise Shull Denise Shull is a former CBOE floor trader turned performance coach specializing in decision-making under risk and uncertainty. She holds a master’s degree in neuropsychoanalysis from the University of Chicago, traded at firms like Schonfeld, and later ran a day trading desk during the internet boom. Her work shows how emotion and cognition are intertwined in every decision—a theme she explores in her book Market Mind Games, which helped inspire the Wendy Rhoades character on Showtime’s Billions. Today, she coaches hedge fund managers, traders, and elite athletes around the world on how to use emotions and intuition as a competitive edge.   Disclosure: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD) which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document   Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.   Trumpet Trumpet Fanfare by bevibeldesign -- https://freesound.org/s/350428/ -- License: Creative Commons 0 Wah Wah Wah Wah wah trumpet failed joke punch line.wav by Doctor_Jekyll -- https://freesound.org/s/240195/ -- License: Attribution 4.0 Dramatic Drum Roll dramatic drum roll.wav by ingsey101 -- https://freesound.org/s/51401/  -- License: Attribution 3.0

Finding quality trade ideas for the Wheel Strategy is essential—but where do you actually get them? In this episode, Dan Passarelli breaks down the best (and worst) sources for finding wheel trade candidates. From trade idea services and investment clubs to news media and DIY analysis, Dan explores the pros and cons of each approach and shares what really works for covered calls and cash-secured puts. Dan also discusses why boring, sideways stocks make the best wheel candidates, why the pundits' favorite stocks are often the trickiest to trade, and teases an upcoming series on fundamental, technical, and volatility analysis for building your own watchlist. What You'll Discover in This Episode: Trade idea services: The difference between "general trades" and wheel-specific investment ideas Why most trade idea services only give entries (not exits) and how to evaluate them Investment clubs: Learning from peers and building synergy through shared knowledge The media trap: Why stocks that "bleed" or soar aren't always ideal for wheel trading Selling options is selling volatility: Why sideways stocks outperform for covered calls and CSPs DIY analysis preview: Dan's upcoming deep-dive episodes on fundamental, technical, and volatility analysis The role of "idea people" in trading and why dreams need execution Resources & Links: Subscribe to the Wealth Building With Options Podcast Learn more about host Dan Passarelli and Market Taker Mentoring: MarketTaker.com Support the Show: Become a paid subscriber at WealthBuildingPodcast.com for access to video extras, subscriber-only trade ideas, all of Dan's real covered call and cash-secured put trades, monthly AMA webinars, and unusual options activity alerts   Disclosure: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD) which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.   Trumpet Trumpet Fanfare by bevibeldesign -- https://freesound.org/s/350428/ -- License: Creative Commons 0 Wah Wah Wah Wah wah trumpet failed joke punch line.wav by Doctor_Jekyll -- https://freesound.org/s/240195/ -- License: Attribution 4.0 Dramatic Drum Roll dramatic drum roll.wav by ingsey101 -- https://freesound.org/s/51401/  -- License: Attribution 3.0

In this episode of Wealth Building with Options, Dan sits down with James Kostulias, Head of Trading Services at Schwab—where he oversees the end-to-end trading experience for clients at a firm averaging over 7 million trades per day for three consecutive quarters. From Schwab’s latest Q4 Trader Sentiment Survey to the dramatic evolution from “options are too risky” to “options as risk management tools,” James shares an insider’s view of how retail trading has fundamentally transformed. If you've ever wondered how serious traders think about hedging, income generation, and adapting to different market regimes, this conversation is packed with insights you can put to work in your own trading. Listen, You'll Discover Why traders are “bullish but cautious” right now — How Schwab’s Q4 Trader Sentiment Survey shows more than half of respondents are bullish on the market long term—while a growing majority (66%, up from 56%) also think it’s overvalued in the short term. How options fit a bullish-but-worried mindset — The specific ways traders are using stock replacement, covered calls, hedging, and other options strategies to stay invested while managing downside risk. The evolution of the retail options trader — How clients have shifted from viewing options as “too risky” to using them as core risk-management tools—and why 1 in 3 traders (versus 1 in 5 just two years ago) are now moving into complex options within their first year. From 90% traders to 50/50 — How Schwab’s live events have evolved from primarily attracting active traders to drawing equal numbers of long-term investors seeking to use options for income generation and risk management—a major shift in just 18 months. The education engine behind today’s options traders — A look at Schwab’s massive education effort: 30–35 hours of live webinars per week, extensive on-demand courses and articles, and 22–24 live events per year—all completely free to clients. Inside the numbers — Why Schwab’s position as the industry leader—averaging 7+ million trades daily—makes their client-behavior insights uniquely valuable for understanding real market trends. Investors vs. traders: why the label doesn’t matter — Why James believes you shouldn’t get hung up on whether you’re a “trader” or an “investor,” and how Schwab supports both ends of the spectrum with specialized desks and resources. 24/5 trading: powerful tool or dangerous temptation? — The real pros and cons of extended-hours and 24/5 trading, how U.S. clients use it episodically while international clients leverage it as their primary trading window, and why trying to be “on” around the clock can work against you. What’s coming next for options traders at Schwab — How Schwab is preparing for spot crypto trading (first half of next year), expanded CBOE options hours (one hour earlier, 15 minutes later), and single-stock 0DTEs (expected in a Q1 launch window)—and why doing it “the Schwab way” means platforms, risk tools, and education must all be ready before launch. The one skill James thinks traders must develop — His biggest piece of advice: learn to adapt your strategies to changing market conditions instead of forcing one “favorite” strategy on every environment. Guest Bio – James Kostulias James Kostulias is Head of Trading Services at Schwab, where he oversees the end-to-end trading experience for clients, including the award-winning thinkorswim suite of platforms. With more than 25 years in financial services—much of it with TD Ameritrade in retail, technology, and active trader leadership roles—James has been at the forefront of the industry’s evolution from “options are too risky” to “options as risk management.” He has served as a board member and former president of the Wall Street Technology Association, previously sat on FINRA’s Technology Advisory Committee, and is a graduate of the SIFMA Securities Institute program at Wharton. He holds a B.A. in Business Administration from Rutgers University along with Series 47, 24, and 63 licenses. Resources & Links Schwab Q4 Trader Sentiment Survey – quarterly insights into trader sentiment, available at Schwab.com Schwab Trading Activity Index (STAX) – monthly insights into actual client trading behavior, available at Schwab.com Learn more about options education and coaching with Dan at MarketTaker.com Disclosure: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD) which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.   Trumpet Trumpet Fanfare by bevibeldesign -- https://freesound.org/s/350428/ -- License: Creative Commons  Wah Wah Wah Wah wah trumpet failed joke punch line.wav by Doctor_Jekyll -- https://freesound.org/s/240195/ -- License: Attribution 4.0 Dramatic Drum Roll dramatic drum roll.wav by ingsey101 -- https://freesound.org/s/51401/  -- License: Attribution 3.0

Why Traders Lie to Themselves — and How to Stop When it comes to covered calls and cash-secured puts, most traders tell themselves comforting half-truths: “I’d be fine owning the stock if it drops.” “I’d be fine selling my shares if they get called away.” But when those scenarios actually happen—when a stock gaps lower or rallies far past a strike—those same traders often panic, blame the market, and forget the plan they swore they’d follow. In this episode, Dan Passarelli unpacks the psychology behind these lies and how to replace emotional trading with data-driven discipline. Through relatable stories (including a red-light ticket and an ancient Roman twist), Dan shows why even the smartest investors fall into the trap of self-deception—and how to break free from it. In This Episode Why traders say they’re okay with assignment—but secretly aren’t How cash-secured puts and covered calls reveal your true comfort with risk The real “sweet spot” where these strategies outperform the market How to use data and visualization to make smarter, more objective decisions What mirror neurons and Michael Jordan can teach you about trading mastery How to “outhuman your humanness” by training your brain to respond with logic instead of emotion Key Takeaway You can’t control the market—but you can control how you react. When you make trading decisions based on logic and data, not emotion or ego, you gain a consistent edge. Covered calls and cash-secured puts might not make you rich overnight—but they can help you steadily outperform by losing less when others panic. Subscribe & Support: WealthBuildingPodcast.com — Get access to video extras, subscriber-only trade ideas, Dan’s real covered call and cash-secured put trades, monthly AMAs, and unusual options activity alerts. Disclosure: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD) which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.   Trumpet Trumpet Fanfare by bevibeldesign -- https://freesound.org/s/350428/ -- License: Creative Commons 0 Wah Wah Wah Wah wah trumpet failed joke punch line.wav by Doctor_Jekyll -- https://freesound.org/s/240195/ -- License: Attribution 4.0 Dramatic Drum Roll dramatic drum roll.wav by ingsey101 -- https://freesound.org/s/51401/ -- License: Attribution 3.0

Episode 38: The Objective of My Affliction 95% of traders lose money. Not because they're not smart—but because they're missing something fundamental. In this episode: What if most traders are making the same mistake with every single trade? What's the simple two-word framework that changes everything? Why don't even experienced traders understand the real secret to consistent profitability? What if you could improve your results overnight with one mindset shift? This episode is short but mighty. Discover what separates the winning 5% from everyone else.     Disclosure: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD) which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.   Trumpet Trumpet Fanfare by bevibeldesign -- https://freesound.org/s/350428/ -- License: Creative Commons 0 Wah Wah Wah Wah wah trumpet failed joke punch line.wav by Doctor_Jekyll -- https://freesound.org/s/240195/ -- License: Attribution 4.0 Dramatic Drum Roll dramatic drum roll.wav by ingsey101 -- https://freesound.org/s/51401/  -- License: Attribution 3.0

Summary: Dan Passarelli sits down with coach John Kmiecik to unpack why smart traders still struggle with losses, risk, and variance—and how to reframe decisions using Prospect Theory. They cover loss aversion, the disposition effect, myopic loss aversion, “house money” mental accounting, and practical coaching tactics (like multiple exits and portfolio-level thinking) to build discipline. Dan also corrects a note from last week: neuroscientist John Coates earned his degrees at the University of Cambridge. Key Takeaways Prospect Theory in practice: Most traders feel losses about twice as strongly as equivalent gains, which skews decisions if left unmanaged. Loss aversion shows up everywhere: Hesitating to take small losses, rolling losers “to get back to even,” and cutting winners too early. Myopic loss aversion: Staring at a single position and checking P&L too often leads to reactive choices; think in portfolios, not trades. Multiple-exit approach: Taking a small, early profit can make it psychologically easier to hold for the primary target. Variance desensitization: You must get comfortable with swings; focus on net outcomes over a series of trades, not tick-by-tick moves. Mental accounting pitfalls: “Playing with house money” is a trap—capital is capital, regardless of where it came from. Framing matters: “Selling a put” can be reframed as “agreeing to buy shares at a discount with volatility rebates,” then managed by plan. Preparedness beats FOMO: If you miss a setup, another will come. Have every “twist and turn” covered in your plan before the trade. Practical Tools Mentioned Multiple-exit method: Scale out (e.g., take a small “comfort” profit, then hold for the main target). Portfolio-level targets: Judge results over a basket of trades, not a single outcome. Account hygiene: Close the P&L window when it provokes impulsive behavior. Pre-mortems: Visualize assignment, gaps, and management steps before you enter. Links & Resources Become a paid subscriber for video extras and trade ideas: wealthbuildingpodcast.com Learn more about Dan Passarelli and Market Taker Mentoring: markettaker.com About the Guest John Kmiecik is a senior coach at Market Taker Mentoring. He works 1-on-1 with traders on strategy selection, risk management, and the psychology required to execute consistently. Support the Show Subscribe on your favorite platform (Apple Podcasts, Spotify, etc.). Ratings and reviews help more traders find the show—thank you for spreading the word. This is an ad-free podcast. Paid subscriptions keep it going and unlock members-only benefits. Disclosure: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD) which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.   Trumpet Trumpet Fanfare by bevibeldesign -- https://freesound.org/s/350428/ -- License: Creative Commons 0 Wah Wah Wah Wah wah trumpet failed joke punch line.wav by Doctor_Jekyll -- https://freesound.org/s/240195/ -- License: Attribution 4.0 Dramatic Drum Roll dramatic drum roll.wav by ingsey101 -- https://freesound.org/s/51401/  -- License: Attribution 3.0

In this episode, Dan Passarelli explores how biology and psychology quietly influence every trading decision—often more than logic or data. Through a story that begins in the Chicago trading pits and leads all the way to a conference in Hong Kong, Dan recounts his unexpected encounter with John Coates, a former Goldman Sachs trader turned neuroscientist and author of The Hour Between Dog and Wolf. That meeting opened Dan’s eyes to how our hormones, brain structure, and subconscious impulses affect trading outcomes—especially in long-term strategies like the Cycle Recycle Trade, where patience and discipline are tested by human nature itself. The title, “Crossing the Red Dragon,” refers both to Dan’s physical journey across China and the metaphorical journey traders face when crossing from logic to emotion—from the rational prefrontal cortex to the ancient instincts that drive risk-taking. Inside the Episode Why trading decisions are influenced as much by biology as by strategy How hidden biases—like availability and recency—cause traders to misread success or failure Why statistically sound systems still “feel wrong” when results come unevenly The psychological tug-of-war between small, immediate rewards and larger, delayed ones How understanding the science of compounding helps traders stay disciplined through losing streaks Key Insight “Trading isn’t just logical—it’s biological. The greatest edge a trader can develop is self-awareness.” Recommended Reading Book: The Hour Between Dog and Wolf by John Coates — a fascinating look at how the body’s chemistry and brain structure affect financial decision-making. Available on Amazon. John Coates is a former Goldman Sachs and Deutsche Bank trader who earned his PhD at Cambridge and became a neuroscientist studying the biology of financial risk taking.  Subscribe to Wealth Building with Options on Spotify, Apple Podcasts, or YouTube. For bonus episodes, trade breakdowns, and monthly AMAs, visit WealthBuildingPodcast.com and join as a paid subscriber. Disclosure: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD) which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.   Trumpet Trumpet Fanfare by bevibeldesign -- https://freesound.org/s/350428/ -- License: Creative Commons 0 Wah Wah Wah Wah wah trumpet failed joke punch line.wav by Doctor_Jekyll -- https://freesound.org/s/240195/ -- License: Attribution 4.0 Dramatic Drum Roll dramatic drum roll.wav by ingsey101 -- https://freesound.org/s/51401/  -- License: Attribution 3.0

Have you ever "felt" something was off in the market—before you could explain why? In early 2021, Dan noticed unusual behavior across several stocks; days later, the Archegos Capital blow-up surfaced. It wasn't clairvoyance—it was his subconscious processing patterns his conscious mind hadn't connected yet. In this episode, Dan explores how biology and psychology shape trading decisions: why fear and overconfidence sneak in even when you know the math, and how to align instinct with process so you can trade with discipline even when emotions run hot. Key Takeaways Emotion before logic: Neurons transmit electrical signals along axons that release neurotransmitters—often triggering reactions before deliberate reasoning. Your "second brain": The gut's dense neural network influences feelings that show up in trading. Bandwidth is limited: Your subconscious handles massive inputs while conscious attention is scarce; emotions act as shortcuts (heuristics). We don't "feel" probability: Humans evolved for immediate threats, not statistics—so design rules that protect you from your instincts. Filtered reality: The thalamus suppresses noise so you can focus—meaning each trader perceives a different "market." The map ≠ the territory: Past experiences create schemas that color today's decisions. Know the real opponent: Your brain can help—or sabotage—your edge. NLP as a toolkit: Regardless of debates, several NLP ideas provide useful mental models for reframing limiting beliefs. Memorable Quotes "Emotions exist to make thinking less resource-intensive." "When you're trading, your one enemy is your own brain." "A trader who's never seen a six-standard-deviation move may 'know' it can happen—but won't believe it until it does." "These shortcuts help—and they hurt." How to Apply This Tomorrow Pre-commit entry/exit/adjustment rules. Audit one recurring feeling and pair it with a counter-rule. Protect attention (no notifications; 90-minute focus blocks). Post-trade: log feeling → action → outcome to retrain tags. Review distributions so variance doesn't shock you. Subscribe & Support Join the Wealth Building with Options community for more: video extras, real trades from Dan's account, monthly AMAs, and unusual options activity alerts. Subscribe at WealthBuildingPodcast.com.     Disclosure: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD) which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.   Trumpet Trumpet Fanfare by bevibeldesign -- https://freesound.org/s/350428/ -- License: Creative Commons 0 Wah Wah Wah Wah wah trumpet failed joke punch line.wav by Doctor_Jekyll -- https://freesound.org/s/240195/ -- License: Attribution 4.0 Dramatic Drum Roll dramatic drum roll.wav by ingsey101 -- https://freesound.org/s/51401/  -- License: Attribution 3.0  

What If You Could Turn a Losing Trade Into a Winner—Without Taking the Loss? Most covered call and cash-secured put traders hit a wall when their trades go against them. The stock blows through their strike price, they're staring at a loss, and panic sets in. But what if there was a way to defer that loss, improve your odds, and keep your original credit intact? Enter the net-zero roll—the technique that separates winning traders from frustrated ones. In this episode, Dan reveals how this powerful management strategy lets you "kick the can down the road" by rolling out in time and up or down in strikes for roughly the same premium you paid to close. The result? You preserve your credit, dramatically improve your probability of success, and—most importantly—keep your psychology steady so you're not losing sleep over one bad "wheel cog." But here's the catch: your annualized return takes a hit. And that's where Dan's One-Third Rule comes in—a reality check that'll save you from disappointment and help you set realistic expectations for what wheel trading actually delivers. Coach John Kmiecik joins the conversation to share his insights on screening, technical analysis, and the mindset shifts that separate struggling traders from those who trade with confidence and ease. Why This Episode Will Change How You Think About Covered Calls and Cash-Secured Puts The truth about annualized returns: They're marketing, not reality. Discover why your actual returns will likely be about one-third of your initial calculations—and why that's still excellent. The net-zero roll explained: Learn the exact mechanics of buying back your short option and selling a later-dated, farther OTM option for approximately zero cost. It sounds like magic, but it's pure technique. Psychology meets technique: Why does this strategy work so well? Because it removes the emotional weight of "losing" on individual trades and helps you see the bigger picture of the full cycle. The One-Third Rule: Dan's back-of-the-napkin formula for setting realistic expectations. If you calculate 12% annualized, expect closer to 4%. Why? Rolls, adjustments, early exits, and the messy reality of trading. When "perfect" isn't the goal: Stop obsessing over every strike price and learn to manage early and often. Small, proactive adjustments beat expensive, late-stage scrambles every time. Your Practical Playbook When to roll: As soon as price moves through your strike. Don't hope it comes back—act immediately. How to structure the roll: Aim for net-zero or close to it. Small debits or credits across multiple "cogs" balance out over the cycle. Screening and strike selection: Use technicals to guide you, but don't overthink it. The real edge is having a management plan, not picking the perfect strike. Tracking your cycles: Log each trade within the cycle—credits, debits, days added, and new strikes—so you can see your true cycle P&L and learn from every wheel turn. What You'll Walk Away With By the end of this episode, you'll understand why experienced wheel traders don't sweat individual losses—they manage them. You'll see how the net-zero roll transforms a potential disaster into a highly probable win, and you'll learn to think in terms of complete cycles rather than isolated trades. This is the mindset shift that took Dan decades to figure out. Now you can have it in under 40 minutes. Resources Mentioned Market Taker Mentoring: MarketTaker.com Subscribe/Support the show: WealthBuildingPodcast.com Free + paid tiers available Paid subscribers get: video extras, live monthly AMAs, Dan's real-time covered call and cash-secured put trades, unusual options activity alerts, and exclusive trade ideas Get More From This Community Don't miss a single episode—subscribe on Spotify, Apple Podcasts, or your favorite podcast app. Want to level up your wheel trading? Consider a paid subscription for hands-on video training, real trade examples from Dan's brokerage account, monthly Q&A sessions, and actionable trade alerts. Got questions? Send them in after you subscribe, and they might be featured in the next AMA!   Disclosure: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD) which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.   Trumpet Trumpet Fanfare by bevibeldesign -- https://freesound.org/s/350428/ -- License: Creative Commons 0 Wah Wah Wah Wah wah trumpet failed joke punch line.wav by Doctor_Jekyll -- https://freesound.org/s/240195/ -- License: Attribution 4.0

In this episode of Wealth Building with Options, Dan Passarelli dives deep into the motivations behind trading the wheel strategy—and why understanding them can make or break your results. Dan begins with a mistake he sees all too often: traders push strikes too far away from the stock price, "running and hiding" instead of sticking to their true objective—getting assigned—which undermines their entire strategy. From there, he lays out the framework of the who, what, and why of the wheel strategy: Who trades the wheel? Primarily conservative investors seeking consistent income without intensive labor. Dan personally uses it as a conservative investor 97% of the time, with only 3% reserved for risk-taking. The strategy also attracts traders looking for short-term "skate" opportunities—though Dan notes credit spreads might be better suited for that objective. What is cycling into wheel trades? Own stock → sell a call → skate and collect premium → sell another call → get assigned and sell the stock. Then sell a cash-secured put → skate → get assigned and buy the stock back → sell calls again. This creates the repeating "wheel" cycle. Why trade the wheel? Dan highlights both trade objectives (intentionally getting assigned into or out of stock) and skate objectives (capturing premium without assignment). For cash-secured puts with trade objectives, he identifies three main sub-motivations: Buy stock below current market price for long-term holding. Buy stock to begin the wheel strategy. Buy back stock from a previous covered call assignment. The Cycle Mindset Revolution A key takeaway: successful wheel trading isn't about the profitability of individual trades, but about completing profitable cycles. Dan explains how traders can recover from losses by continuing the sequence until the overall cycle closes in profit: "I sold this put at $1 and now I have to buy it back at $2.50. I'm down $1.50 but I sell another put at $1.25... It took me 3 trades to lock in 50 cents. That is a completed cycle." This mindset shift—focusing on cycles rather than one-off wins—separates successful wheel traders from those who give up too early. Professional Insights Dan also reveals how professional traders approach the wheel differently. Instead of hiding far out-of-the-money, institutional traders often sell "500, 1000, 2000 puts right at the money," showing why proper strike selection is critical when the goal is assignment. Whether you're new to the wheel or already using it, this episode will fundamentally change how you think about each trade within the larger cycle—and why patience with the process, not individual results, drives long-term profitability. By the end, you'll understand why focusing on cycles, not individual trades, is the key to wheel success. Resources & Links: Learn more about Dan and Market Taker Mentoring at MarketTaker.com Become a paid subscriber by visiting https://wealthbuildingpodcast.com   Disclosure: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD) which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.   Trumpet Trumpet Fanfare by bevibeldesign -- https://freesound.org/s/350428/ -- License: Creative Commons 0 Wah Wah Wah Wah wah trumpet failed joke punch line.wav by Doctor_Jekyll -- https://freesound.org/s/240195/ -- License: Attribution 4.0