It wasn’t an actual bear market, but it’s been a bear market event for some chip makers. Now, with the wheel strategy, I was assigned a few Intel contracts, and since then, the stock has declined. Has my wheel strategy lead me into becoming a bag holder?
What Is Bag Holding?
First, bag holding is a negative term, and if someone on Reddit or your mastermind group calls you a bag holder, it’s not a compliment. It might be fighting words to some.
A bag holder is a person who continues to hold stocks against technical and fundamental analysis and suggests that they should be sold. The bag holder feels the stock will return to value and point to profit against all experience. It’s viewed as foolish since while the stock, or investment, has tanked, it traps money that can be used elsewhere.
Am I A Bag Holder?
Well, face it: If you use the wheel strategy and sell PUTs higher in the Delta, you increase your chances of being assigned those stocks/ETFs.
As I mentioned earlier, I was assigned some Intel stocks, not once but four times.
I saw a declining stock price after being assigned a round lot of stocks, and averaging down by selling additional puts in my wheel strategy. I was assigned at $40 x 1, $38 x 1, and $36 x2.
My average cost is $37.50 at this time, but Intel continued to decline and is trading around the $30 mark. This is a hick-cup in my plans, a tiny bear market event.
So, I have 400 shares of Intel at an average cost of $37.50
- Am I a bag-holder?
- Well, is Intel a bad stock?
- Can I collect premium selling Covered Calls, another additional step in the wheel strategy, while waiting for the stock to recover?
- Is Intel recovering?
Intel is not recovering. Since my last assignment, Intel(INTC) dropped from $36 to around $30, and I’ve not seen any value in selling covered Call options against my Intel shares because there is almost no premium.
I should have answered the first question: am I a bag holder?
I feel no.
The first step in my Wheel Strategy is to only focus on stocks or ETFs I’m willing to hold.
Intel is a good company and, best of all, a dividend-generating stock. With good fundamentals and seeing past my weekly opting writing plans, there is a light at the end of the tunnel.
Intel can and will recover, and in the meantime, I’ll collect some dividends and feel good that I own a piece of a Fortune 500 company.
Do You Think I’m A Bag Holder?
One way to determine whether your investment plans are solid is to share them with other investors, hopefully, those in positions you want to be in.
If you owned 400 shares of Intel, would you feel like you made a wrong decision? Would you sell, cut your losses, and get your money back to working with stock options?
Leave a comment; I’m interested in hearing from you.
 Myself with an interesting Bull Sculpture. Notice: No Lambo’s. :/ | Hi I’m Tom, A Blogger And A PIG Farmer. PIG Farmer as in I grow Passive Income Generators(PIG’s). I’ve been playing with stocks, mutual funds, and options for decades, as well as always working on my side hustle stacks. Unlike what you read online, I’ve yet to find a way to get rich quickly. Get Rich Quick isn’t happening for me. My journey has been long and continues. I hope to have so many PIGs I can stop working at my current job and volunteer as a medical worker overseas. Still waiting, but getting there. I still am a family man, and while on this Journey of Growing PIGs. I wanted to share my adventures(ups and downs), hoping you will contribute with your feedback and comments. Fun Fact: In my spare time, I am a Band-Dad! |