Colby Hill

Stock Market Insurance Broker

[Colby Hill @InvestwithColby]

The Wheel Strategy: one of the most popular income strategies in options trading.

It's simple, repeatable, and works in almost any market.

Here's how I do it, Full Breakdown 🧵

[Colby Hill @InvestwithColby]

A TON OF THINGS HAPPENED IN THE STOCK MARKET TODAY.

Here's a full recap:

1. Wall Street

$SPY $QQQ $DIA Stocks finished nearly flat as surging Treasury yields offset a partial de-escalation in the Middle East. The S&P 500 slipped 0.02% to 7,704.13, the Nasdaq Composite edged up 0.01% to 26,939.37, and the Dow fell 0.31% to 51,349.98. The Russell 2000 lagged with a 0.11% drop to 2,835.58, the VIX rose 3.03% to 15.64, and only three S&P sectors, Communication Services, Energy, and Health Care, closed in the green.

2. Bonds and the Fed

$TLT Yields kept climbing after a blowout flash PMI showed the fastest private-sector growth in more than five years, with the composite reading at 58.4 and services at 58.7 against a 56.0 estimate. The 10-year yield jumped to 5.11%, its highest level since 2007, the 30-year touched 5.438%, its highest since 2004, and the 2-year rose to 4.897%. Fed odds of an October rate hike climbed from roughly 55% to 70% on the data, mortgage rates jumped to 7.37%, and $TLT fell 1.28%.

3. Middle East and Oil

$USO $BNO $XLE Crude reversed higher after reports that US and Iranian negotiators are working on a plan to end hostilities and reopen the Strait of Hormuz, with traders still paying up for supply-risk hedges even as the diplomacy headlines rolled in. $USO gained 2.86% and $BNO rose 2.48%, while energy stocks tracked the move with $XLE up 0.39%.

4. US-China Trade Truce

$SPY Treasury Secretary Scott Bessent said the US and China agreed to extend their trade truce by two months through January 10, 2027, timed just ahead of Xi Jinping's state visit and a planned meeting with Trump. The extension keeps tariff escalation on hold heading into the new year.

5. MGM Resorts

$MGM Barry Diller's People Inc. walked away from its $18 billion, $48.30-a-share bid to take MGM Resorts private, saying only that "the mix wasn't coming together" the way it had hoped. The stock tumbled 11.01%, erasing all the gains it had booked since the offer first surfaced back in June.

6. TD Synnex

$SNX TD Synnex crushed estimates with fiscal third-quarter revenue of $21.56 billion against an $18.91 billion estimate and adjusted EPS of $5.68 versus $4.70 expected, a 59% year-over-year jump. The stock still sank 9.88% as investors zeroed in on negative free cash flow of roughly $976 million and a 61 basis point gross margin contraction tied to its fast-growing, lower-margin Hyve Solutions business.

7. Oracle

$ORCL Oracle sent a force majeure notice on its New Mexico data center, the Jupiter Project tied to its Stargate AI buildout, after local opposition and environmental fights delayed construction and raised questions about payment timelines. Shares dropped 3.49% as investors weighed the setback against a company already running cash-flow negative to fund its AI infrastructure ambitions.

8. Meta

$META Mark Zuckerberg told developers Meta will "profit by taking a small fee from transactions" on its Muse AI agent, which has topped both the Apple App Store and Google Play since its September 8 launch, racking up 560,000 daily active users in its first 11 days. Chief AI officer Alexandr Wang added new commerce integrations with PayPal, Expedia, Instacart, Walmart, Best Buy, and Sephora, and the stock rose 4.48%.

9. Costco

$COST Costco's fiscal fourth-quarter EPS came in at $6.75 versus a $6.52 estimate, up 15% year over year and helped by a $0.15-per-share tariff refund benefit. Net sales rose 11.2% to $93.87 billion on 9.4% comparable sales growth, membership fee income climbed 10.9% for the full year to $5.91 billion, and shares ticked higher in after-hours trading following the print.

10. Darden Restaurants

$DRI Darden's fiscal first-quarter EPS matched estimates at $2.05 and total sales grew 5.1%, led by 6.2% comparable-sales growth at LongHorn Steakhouse, though revenue of $3.20 billion came in just shy of the $3.21 billion estimate. The stock still fell 2.99%, a move analysts pinned more on a tough year-ago comparison that included a one-time $42 million gain from the Olive Garden Canada sale than on any operational weakness.

11. Starbucks

$SBUX Starbucks is closing about 250 underperforming North American stores this week, the latest cut under CEO Brian Niccol's turnaround after 1,500 stores were retrofitted ahead of a September 30 deadline. COO Mike Grams said the closures target locations that "aren't delivering acceptable financial results," and the stock finished little changed, down 0.52% on the day.

📈 CHILL INVESTING — YOUR DAILY STOCK MARKET RECAP

[Colby Hill @InvestwithColby]

Thanks for the follow! Everyone give him a follow if interested in the wheel strategy and getting better everyday!

@WealthCoachMak

[Colby Hill @InvestwithColby]

A cash-secured put is the first half of the Wheel Strategy, and it is simpler than it sounds.

When you sell a put, you are selling someone the right to sell YOU 100 shares of a stock at a price you choose, called the strike. They pay you cash up front for that right. That cash is called the premium, and it is yours to keep no matter what happens. The "cash-secured" part means you already have the money set aside to buy those 100 shares if it comes to that.

Why do wheel sellers love this? Two outcomes, and both are fine. If the stock stays above your strike, the option expires and you keep the premium for doing nothing. If it drops to your strike, you get assigned and buy 100 shares at a price you already said yes to, of a stock you want to own long term.

A hypothetical example, not a trade call: $NBIS is around $243. You sell one $240 put with the October monthly expiration and collect roughly $7 per share, $700 total. If $NBIS stays above $240, you keep the $700. If it drops below $240, you buy 100 shares at $240, cheaper than today. Either way the outcome was planned in advance.

That is the whole idea. You get paid to wait for the price you wanted anyway.

[Colby Hill @InvestwithColby]

@amitisinvesting Big green runups are exactly when covered calls earn their keep on the Wheel Strategy. You collect the premium, and if shares get called away above your cost basis, that is a win too.

[Colby Hill @InvestwithColby]

@WealthCoachMak This is what steady premium selling looks like. Short puts on red days, covered calls on green ones, and only on stocks you would happily own if assigned.

[Colby Hill @InvestwithColby]

@RensingTrades Locking it in at 80% is exactly right. That last 20% of premium is never worth the risk of giving it all back, and now the capital is free to work on the next setup.

[Colby Hill @InvestwithColby]

No trade on $MRVL today.

Price is $257.66, down 1.24% on the day. RSI sits at 61, and price is hugging the top of the Bollinger Band at 86% up the band. Running my Wheel rules checklist:

Cash-secured put needs: red day (yes), bottom half of the band (no), RSI at 40 or under (no). One out of three. Not a setup.

Covered call needs: green day (no), top half of the band (yes), RSI at 60 or over (yes). Two out of three, but the red day kills it.

So the verdict is WAIT. And that is a real answer, not a shrug. Forcing a trade into a setup that does not check my boxes is how premium sellers give their edge back.

The discipline is the strategy. When $MRVL either washes down into the bottom half with a cooled-off RSI, or rips green with real strength, I will be there with a strike picked. Until then, patience pays.

[Colby Hill @InvestwithColby]

Let me show you what the Wheel Strategy actually looks like when the stock does nothing.

Say $AMZN is trading at $246 and it just parks there for months.

Step one, I sell the $245 cash secured put, about 45 days out. I collect around $5.20 a share, so $520 in premium on $24,500 secured. That is just over 2% for one month of waiting.

Step two depends on what happens next.

If the stock drifts under $245, I get assigned 100 shares at an effective cost of $239.80 after the premium. Then I sell the $250 covered call for about $4 and pocket another $400 while I wait.

Here is the boring part people underestimate. If $AMZN sits flat at $246 for six months, I just keep selling calls and collecting. Say $400 to $500 a month on a roughly $24,500 position. Over six months that is around $2,700 to $3,000. Roughly 11 to 12% annualized, on a stock that went nowhere.

That is the whole point. The wheel does not need the stock to run. A flat stock is a paying stock, as long as you only run the wheel on a name you are happy owning long term.

[Colby Hill @InvestwithColby]

@TJTheWheelDeal This is a rule I live by too. I only sell premium on stocks I would happily own long term, so if the thesis breaks I move on without looking back. Plenty of names out there worth collecting premium on.

[Colby Hill @InvestwithColby]

@RensingTrades Cool-down days are a gift for premium sellers. I like selling cash-secured puts on red days when RSI drops to 40 or under, so dips like this are exactly when I'm looking to get paid. No need to chase when you can just collect.

[Space Investor @SpaceInvestor_D]

$RDW: Redwire announced today that it has been selected by Space Systems Command as one of 15 vendors awarded a multiple-award, indefinite-delivery/indefinite-quantity (IDIQ) contract for the National Space Test and Training Complex Innovative Technology and Engineering – Space Test and Range (NITE-STAR) Capability Development.

The contract vehicle, valued at more than $980 million, will enable Redwire to deliver advanced capabilities to support U.S. national security test infrastructure and operational readiness.

Redwire is well positioned to support the design, development, integration, testing and sustainment of advanced space-based and ground-based systems.

[Colby Hill @InvestwithColby]

Strike selection is the difference between collecting steady premium and sweating every market open.

A cash-secured put strike is just your promise: I will buy the stock at this price. The further out of the money you go, the less likely assignment is, and the less premium you collect. That tradeoff is the entire game.

Here is a worked example with $AAPL around $337. This is the framework, not a call on AAPL today.

Sell the $320 put, about 5% out of the money with 45 days to expiration, and you might collect around $4 in premium. The lower payout comes with breathing room. AAPL has to fall 5% for the shares to land in your account.

Sell the $330 put, about 2% out of the money, and the premium is higher. Better pay, but now a small dip puts the stock in your lap. That is the balanced lane.

So how do I pick? Start with the price I would be happy owning the stock at anyway. Only sell puts on stocks I would hold for years. Then the strike only has to answer one question: am I fine buying it here?

Premium income is how the wheel creates its own dividend. Pick the strike that pays you and lets you sleep.

[Colby Hill @InvestwithColby]

@Mr_Derivatives Go fill that gap

[Kevin Chen @Defiantclient2]

$ASTS $T: 🚨 @ATT is now starting to advertise @AST_SpaceMobile service on Instagram 👀

[Colby Hill @InvestwithColby]

A TON OF THINGS HAPPENED IN THE STOCK MARKET TODAY.

Here's a full recap:

1. Wall Street

$SPY $QQQ $IWM Stocks sold off broadly as strong economic data revived fears the Fed may need to keep policy tighter for longer. The S&P 500 fell 0.73% to 7,708, the Nasdaq Composite dropped 1.11% to 26,942, and the Dow slid 0.71% to roughly 51,495, while the small-cap Russell 2000 underperformed with a 1.83% decline. The VIX jumped back above 15 as volatility crept back into the tape after a quiet start to the week.

2. The Fed

$TLT Treasury yields spiked after S&P Global's flash composite PMI hit 58.4, its strongest reading in more than five years, with services output growing at its steepest pace since 2021 and manufacturing accelerating at its fastest clip since 2022. The 5-year yield touched 5% intraday for the first time since 2007 before settling near 4.996%, and the 10-year climbed to 5.106%, with $TLT sliding 1.57% as bond prices fell across the curve.

3. Trump-Xi Summit

$SPY $QQQ President Trump hosted Xi Jinping in Washington for the Chinese leader's first U.S. state visit in more than a decade, but the two sides left without a comprehensive trade agreement. Trump said Taiwan "never came up" in the talks and that Blackwell chips weren't discussed since they "just came out yesterday," while officials floated a formal AI hotline to manage national-security-level incidents instead. The lack of movement on chip controls or rare earths left investors with more questions than answers heading into the next round of talks.

4. Oil and Iran

$USO $BNO $XLE Crude jumped even as diplomatic signals out of the UN suggested room for de-escalation, with Iran's president addressing the General Assembly a day after Trump warned he could "annihilate" the Islamic Republic if no deal is reached. WTI and Brent both pushed higher on the day, sending $USO up 3.33% and $BNO up 4.23%, while energy was the only S&P sector in the green as $XLE gained 0.99%.

5. Cracker Barrel

$CBRL Cracker Barrel delivered new CEO David Deno's first quarterly report as a blowout, with fiscal fourth-quarter adjusted EPS of 99 cents crushing the 18-cent estimate. Shares jumped as much as 8.3% intraday on the print before paring gains to close up 4.55%, as investors welcomed early signs of a turnaround under the new leadership.

6. Worthington Enterprises

$WOR Worthington Enterprises beat estimates in its fiscal first-quarter report, posting adjusted EPS of 82 cents against a 75-cent estimate as net sales climbed 13% to $343.9 million. The company pointed to surging demand for its engineered ASME tanks used in data center liquid cooling systems as a growth driver, and shares that spiked as much as 15.93% in early trading settled to close up 1.41%.

7. KB Home

$KBH KB Home topped estimates with fiscal third-quarter EPS of $1.05 versus a 90-cent estimate, and backlog rose for the first time in four years to 4,398 homes worth $2.05 billion. Revenue still fell 20% year over year to $1.30 billion as deliveries dropped 19%, and shares slipped 2.94% despite the headline beat as investors focused on softer full-year guidance.

8. Oracle

$ORCL Oracle shares fell 3.12% as investors grew more anxious about balance sheet strain from the company's aggressive AI infrastructure buildout. Rising Treasury yields triggered a broader re-rating of capital-intensive growth names across the sector, and ongoing layoffs across Oracle's legacy software divisions added to concerns about softening momentum outside the cloud business.

9. AppLovin

$APP AppLovin dropped 4.03% after Edgewater Research warned the company's growth is stalling, projecting fourth-quarter revenue growth of just 8% to 9% quarter over quarter. A fresh securities-fraud class action was also filed the same morning alleging AppLovin made misleading statements about the progress of its generative AI video tool, adding legal overhang to the growth concerns.

10. IonQ

$IONQ IonQ surged as much as 11.98% intraday before closing up 4.42% after unveiling the industry's first end-to-end real-time quantum error decoder capable of running on a standard commercial CPU instead of specialized hardware. The system was validated on simulated circuits supporting up to 408 logical qubits with just 0.02% processing overhead, tackling one of the biggest bottlenecks standing between today's quantum computers and fault-tolerant scale.

11. Royal Caribbean

$RCL Royal Caribbean confirmed it will pay about $3 billion for a 50% stake in Sandals and Beaches Resorts, marking its biggest move yet into land-based all-inclusive vacations. Shares dipped 1.93% anyway on a broadly red day, as investors weighed the diversification push against the size of the check being written.

12. Securitize

$SECZ Securitize jumped 10.38% after the SEC authorized select trading platforms and liquidity providers to operate under eased rules for tokenized securities, opening the door to trading tokenized stocks under specific conditions. The stock hit a fresh all-time high on the news, extending a run that has seen it climb more than 50% over the past week.

13. Gold

$GLD Gold slid 1.83% as surging Treasury yields made the metal less attractive relative to income-bearing assets. The move came even with equities selling off, a reminder that gold's usual safe-haven bid can get overwhelmed when the story of the day is a rates shock rather than a stock-market panic.

📈 CHILL INVESTING — YOUR DAILY STOCK MARKET RECAP

[Colby Hill @InvestwithColby]

I sold $SOFI mid 17s and looking to buy it back as sentiment is TRASH. Buying back at support in the 15s.

[Colby Hill @InvestwithColby]

@TheLongInvest should I laugh or cry ?

[Colby Hill @InvestwithColby]

@xenomecha I have my $7 CSP

[Colby Hill @InvestwithColby]

@DannyDayan5 Trump Soft Landing, a little different then powells

[Colby Hill @InvestwithColby]

The Wheel Strategy: one of the most popular income strategies in options trading.

It's simple, repeatable, and works in almost any market.

Here's how I do it, Full Breakdown 🧵