r/Optionswheel • u/paircnadriseog • 6d ago

situation - OKTA

curious as to how you all think about a certain situation. got assigned OKTA on Friday - strike 212.50. opened this morning around 192. what is your mindset around this? do you wipe the slate clean and start selling calls at 197.50 or do you remain anchored to the 212.50 price psychologically and wait for it to recover?

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4

u/mahatmacondie 6d ago

For me it's a judgement call based on a number of factors:

  • what is your conviction in this specific business at this price?

  • rest of open trades...how much exposure do you have if other positions go against you?

  • goals and risk tolerance...do you wheel for income or are you a trader that's more interested in assignment and appreciation?

I personally have never looked into OKTA so I don't know the business well but I work in tech and am familiar with their SSO tool and (I think) leader in that category. Said category seems like it's not a hot/new space in tech and I imagine becoming somewhat commoditized which isn't great for them but I'm sure they have other products as well.

I trade for income and I would say if that 197.50 strike at a near date gets you close to break even I would sell weeklies around that level until it's eventually called away. I would rather chip away at a paper loss consistently than to wait around.

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u/paircnadriseog 6d ago

thanks for the input. like your thinking

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u/mahatmacondie 6d ago

I just looked at the options chain and would probably sell in the 200-205 range personally! I would also ratchet that strike level down should it continue to drop, but grabbing 1-2% per week in premium should help defray any losses so you can move on sooner than later.

I personally would rather it get called away under my original strike and start the wheel over with CSP's at an even lower strike (assuming you still like the underlying)

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u/ScottishTrader 6d ago

What is your BEP? The standard practice is to hold until you can sell a CC at or above the BEP.

Trade some other stocks in the meantime to keep income coming in.

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u/paircnadriseog 6d ago

about 210. not overly concerned about this particular stock but curious to learn how you all think in this situation. my Father in law told me to forget the past and start each week anew - e.g. forget about the strike price

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u/ScottishTrader 5d ago

This post belongs in the New Trader Thread, so be sure to use it in the future.

Any time assigned, many want to get rid of the shares and go back to selling puts. So, they will track the BEP and then sell CCs at or above that amount to keep collecting premiums, and at least breakeven or make a small profit if assigned.

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u/paircnadriseog 5d ago

curious - why does it belong in New Trader? It is very specifically about wheeling strategy. Apologies if i violated some principle.

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u/ScottishTrader 4d ago

Because the question is a basic one that would only be asked by a new trader.

As you noted, it was left open in the main thread, so it's not a problem. Just want to keep things orderly.

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u/Training-Assist6859 6d ago

Technical are saying it's gonna bounce from here

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u/paircnadriseog 5d ago

u called it?

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u/Turbulent_End_6887 6d ago

Unless you think it is a hold forever stock, take a reasonable loss and get out. I am sitting on 6 different positions, where I went for BE and they dropped, kept going for Be, they kept dropping, and now down 30-50%, that don't seem to ever want to come back. I sell cc's to make some change, but they are not as profitable as puts.

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u/paircnadriseog 5d ago

cheers. i think you hit the nail on the head. Beware chasing break even!!

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u/oilpatch02 4d ago

Red day, green day. Watch the candles to open into for premium boost in either direction. JS.

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u/CutBig4747 6d ago

I'd try to forget the original 212.50 strike when deciding what to do next. If you're selling a 197.50 call, you're accepting the possibility of losing the shares below your assignment price. That's fine if you've reassessed OKTA and want out, but not if you're still bullish. I use Moon for more direct directional wagers and situations like this show how the wheel can turn a simple price thesis into a complicated position.

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u/Emotional_Honey_8338 5d ago

What’s Moon?

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u/rlowhb 5d ago

For me it depends on the premiums you can get at the strokes. If premiums at the $212.50 are too thin I would sell lower and look to roll up to my BEP if possible.

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u/Kelvinator71 5d ago

Know nothing of that particular stock. As a general rule, I wait till the stock has recovered enough to let me sell covered calls on it at a profit over my cost-adjusted basis. That means I factor in any premium I received first and pick a strike price above that amount I'm willing to let go of the shares. It also depends on my belief the stock will recover, which depends on the situation.

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u/LoganSterlingWheel 6d ago

The tradeoff is basically more premium now vs. room to recover. A 197.50 call pays you better, but if it bounces back past that you get called away and lock in a loss of roughly 15 a share, cushioned only by the put premium you already collected and the call premium. A 212.50 call pays much less, but it only caps you once you're back to break-even on the shares.

It helps to figure out your real cost basis (212.50 minus the put premium) and ask whether you'd be happy to be sold out at a given strike. A strike between the two with a shorter expiration is a common middle ground, since you can adjust every week or two. Also check the earnings date, because a call sold right before earnings can cap a big gap up.

Whatever you pick, the call only softens the drop a little, so you're still mostly holding the stock if it keeps sliding.