Wealth Building With Options

By Wealth Building With OptionsBusiness Education Investing How To

Wealth Building With Options episodes

March 10Ep57 - GTCs and Birds and Bees
Dan continues the conversation on liquidity, execution and trade management by focusing on good-till-canceled (GTC) orders, gap risk and the trade-offs of handling illiquid options. He explains when it makes sense to let options expire rather than overpay to close them, why rolling illiquid in-the-money options is often impractical and how traders can still create solid opportunities in wide markets.
Key Topics
Using GTC orders to automate exits on covered calls and cash-secured puts
Choosing 3-cent, 5-cent or 10-cent GTC bids based on liquidity and price increments
The decision between rolling, waiting or letting short options expire
Why paying up to close illiquid far OTM options is often a waste
In-the-money illiquid options and why larger delta usually means wider spreads
Why rolling illiquid ITM options is often unrealistic
The trade-off between certain overpayment and random gap risk
Why accepting expiration or assignment often captures full theta value
Market makers vs. retail traders as liquidity providers
Why a wide market can still produce a good trade if the return meets your criteria
Key Takeaways
GTC orders can improve efficiency. If the order isn’t working, it can’t get filled, so having resting close orders in place creates opportunities you’d otherwise miss.

Don’t overpay for worthless options. On expiration day, paying a nickel or dime to close a far OTM illiquid option is often just throwing away theta.

Illiquid ITM options are a different beast. Wider spreads reflect higher hedging risk for market makers, which makes rolling much harder and more expensive.

Overpaying is certain; gap risk is random. In many illiquid situations, accepting expiration or assignment adds volatility, but avoids a guaranteed drag on returns.

Letting options expire can be the best price. Expiration or assignment removes all time value, which is effectively the most favorable close possible.

Different option classes have different personalities. Some names are easier to middle, some resist all compromise, and repeated trading helps you learn the difference.

What matters most is the trade’s value to you. If the annualized return and setup fit your plan, a wide market can still produce a worthwhile trade.
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
38 min
March 03Ep56 - Wait. WHAT About Alice?
Dan is joined by returning guest John Kmiecik to unpack the real-world consequences of trading illiquid options (wide bid/ask spreads, low volume/open interest and “roach motel” trades you can’t exit efficiently). They also discuss how expanding strike/expiration listings can fragment liquidity, even in big names, and when a “one-sided” wheel trade can justify holding through expiration.
Key Topics
What liquidity is and why it’s central to wheel trading execution
The “roach motel” problem: easy to enter, painful to exit
First-pass liquidity checks: bid/ask spread as the quickest warning sign
Supporting clues: volume and open interest (and why they usually align with spreads)
The risk of trading unknown tickers with wide spreads
Position sizing vs. liquidity: why 1,000-share covered calls can be hard to unwind in thin names
Liquidity fragmentation from more strikes/expirations (including M/W/F listings)
Surprising pockets of illiquidity even in large underlyings depending on expiration
Earnings timing and why certain expirations may be missing or avoided
When illiquid wheel trades can still work: entering with a plan to hold to expiration
Key Takeaways
Bid/ask spread is the “tell.” If it’s wide, you don’t need more proof; execution costs are already embedded in that market.

Illiquidity turns profits into mirages. You can be “right” on paper and still struggle to exit near breakeven because the spread eats the edge.

Volume/open interest matter, but spreads matter more. Low OI/volume often explains wide markets; the spread is the final summary metric.

Size must match the option market. The bigger your position (e.g., 10-lot calls), the more liquidity becomes non-negotiable.

More expirations can mean worse trading. Adding strikes and expirations can dilute order flow, widening markets even in otherwise liquid names.

Not all expirations are created equal. Liquidity can vary dramatically across adjacent expirations; always check the specific chain you plan to trade.

One-sided wheel trades offer an escape hatch. If you can enter at a price that meets your plan and intend to hold to expiration, liquidity on the exit may be irrelevant.

Your trading plan decides the tolerance. If rolling/active management is required, illiquidity is a bigger threat; if “hold to expiry” is acceptable, you have more flexibility.
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
Car Screech
car screech.wav by SGAK -- https://freesound.org/s/467794/ -- License: Creative Commons 0
25 min
February 24Ep55 - Pro Tips on Middling Markets
Dan explains why execution price is the one place retail traders truly “compete” with market makers and how improving it can dramatically reduce slippage, the biggest hidden cost in options trading. You’ll learn how market makers manage risk (delta-neutral hedging) and why they demand compensation through the bid/ask spread, plus practical tactics for middling markets, using resting orders and handling illiquid options without getting trapped by wide spreads.
Key Topics
Why execution price (not trade direction) is where you compete with market makers
How market makers hedge: delta-neutral positioning and remaining Greek risks
Theoretical value vs. bid/ask and how slippage is “paying for liquidity”
Practical middling: balancing a better price vs. the probability of getting filled
Wide markets: what they signal about perceived risk and liquidity-provider behavior
“Unknown counterparties” and why order flow behavior varies by underlying
Behavioral traps: primacy effect and price anchoring when markets move
Using resting (GTC) limit orders to target required yield (skate yield / dividend yield)
“Wish list” orders: when they work and how they can tie up cash
Managing very illiquid options: when the best exit tactic is the “do nothing” plan
Key Takeaways
Slippage dwarfs commissions. Selling the bid and buying the offer repeatedly can quietly erase edge.

Market makers must be paid for risk. They hedge delta quickly, but still carry gamma/theta/vega exposure, so spreads exist for a reason.

Middling is a skill, not a rule. The optimal limit price depends on liquidity, tick size (pennies vs. nickels) and how that option class trades.

Start in the “middle range.” When uncertain, work an order roughly between the bid and theoretical value rather than immediately hitting the bid.

Don’t let anchoring sabotage good trades. If the math still works at a new market price, the opportunity may still be valid.

Resting orders align price with your plan. If you need a specific yield, let the market come to you instead of forcing a trade.

Illiquidity changes the exit calculus. Sometimes closing early is an overpaying problem and a theta/opportunity-cost problem.

Letting options expire can eliminate exit slippage. You accept gap risk, however, especially when assignment forces you to wait until Monday.
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
43 min
February 17Ep54 - Managing Trading Expenses Like a Boss
Dan breaks down the real costs of trading and why commissions, while worth managing, are rarely the biggest threat to your returns. The true hidden expense is slippage, driven largely by liquidity. He walks through how to evaluate option liquidity using bid-ask spreads, size, volume and open interest, and sets the stage for mastering the critical execution skill of middling the market.
Key Topics
Trading as a business with controllable operating expenses
Why commissions are smaller than most traders think and how to negotiate them
Slippage as the largest hidden cost in options trading
The 10% Rule for evaluating bid-ask spreads
Why liquidity should be assessed across multiple strikes and near-term expirations
Using market size (contracts bid/asked) to gauge execution quality
Understanding volume vs. open interest and what each reveals
Why not all high-volume options are equally liquid
The concept of theoretical value between bid and ask
Introduction to middling the market to reduce slippage
Key Takeaways
Commissions are rarely the real problem. Slippage from poor execution can quietly cost far more.

Tight markets matter. Consistent narrow bid-ask spreads across the option chain improve long-term results.

Liquidity is multi-dimensional. Spread width, size, volume and open interest all contribute to execution quality.

Market makers price around theoretical value. Trading too close to the bid or ask gives up edge.

Execution skill compounds. Learning to work orders closer to the midpoint can materially improve performance over time.
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
30 min
February 10Ep53 - Lemonade Stands and Other Moments of Trauma
Dan explains how wheel-style covered calls can turn “meh” or even speculative stocks into strategic, risk-managed income plays through cumulative premium and even share-loan income. He also explores the often-overlooked reality that trading is a business with costs, especially taxes, commissions/fees and slippage. He shares two real trade stories to show how premium collection can create downside cushion and discusses practical tax considerations.
Key Topics
Turning “average” stocks into strong outcomes via options overlay
Cumulative discount/hedge effect: premium as downside cushion over multiple call cycles
Measuring returns: percent of cost basis, annualized return and if-called return framing
Speculative wheel setups: when guidelines can be overridden by math
Two-pronged income: covered call premium + stock loan interest in heavily shorted names
The “lemonade stand” lesson: every business has input costs, trading included
Core cost buckets: taxes, commissions/fees, slippage (and why they matter more than people think)
Tax positioning: tax-deferred/tax-free accounts (e.g., IRA) for wheel cycles
“Trader tax status”/treating trading as a business: what to ask your accountant
1256 contracts and index options: potential tax advantages and why they can clash with wheel mechanics
Margin mechanics: why SPX vs. SPY mismatches can become naked exposure under Reg-T
Portfolio margin considerations, eligibility requirements and broker-specific rules (and limits in IRAs)
Key Takeaways
Wheel returns are often about the premium, not the stock. A stock doesn’t need to be a “home run” if the options structure creates a favorable payoff.

Cumulative premium reduces speculation. Each additional premium cycle increases downside cushion and improves the risk profile versus the initial entry.

High-IV, high-short-interest setups can offer “double dip” income (option premium + share lending), but they are inherently higher risk and require intentional sizing and expectations.

Treat trading like a business. Costs are real, especially taxes and execution friction, and ignoring them makes otherwise “good” trades look like they “don’t work.”

Account selection matters for the wheel. Because the wheel mixes long-term stock holding with short-term option cycles, tax treatment can get messy in taxable accounts.

Know the product mechanics before chasing tax benefits. Index options and 1256 treatment can be attractive, but wheel-style coverage can break if the underlying and option product don’t margin as a true covered position.

Your next best move is better questions. Bring your accountant/broker targeted questions about account type, deductions/eligibility and margin rules.
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
34 min
February 04Ep52 - Wheel Trades That Don’t Suck (Part II)
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
41 min
January 27Ep51 – Wheel Trades That Don’t Suck
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
34 min
January 20Ep50 - That Which Is Measured Is Improved
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
36 min
January 13Ep49 - The Problem with Backtesting
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
34 min
January 06Ep 48 - The Wheel Strategy Resolutely
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
12 min

About Wealth Building With Options

From the publisher's feed

Welcome to the Wealth Building With Options Podcast with Dan Passarelli. This podcast is dedicated to making you a calm, consistent and confident options trader. Inside each episode, Passarelli, an…