Some of you may remember me starting a wheel trade on NRZ back in November 2018. Initially the trade was put under significant pressure as the stock dropped 28% not long after I entered the trade.
When I first initiated the trade NRZ was trading at $17.25 and it is now trading at $16.74.
In total I was assigned on 400 shares at $17 and received $850 in option premium and dividends.
I had sold calls at $16 and just after Christmas I was assigned on 300 shares. Not sure why the full 400 weren’t taken, but I guess that’s just how it works.
In any case I’m left with 100 shares and a $16 May 2020 call, so the last batch of 100 shares will likely be called away at some point.
Total profit to date is $437 on total capital risked of $6,110 which is a return of +7.15% in 14.5 months.
Not a stellar return by any stretch, but a positive return non the less and not bad on a stock that has gone down 2.96%.
That’s the power of the wheel trade.
Trade safe!
Disclaimer: The information above is for educational purposes only and should not be treated as investment advice. The strategy presented would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in this strategy should do their own research and seek advice from a licensed financial adviser.
