Another "Can the wheel beat the S&P" Reply

Yet again there have been many posts saying the wheel just cannot beat the S&P returns.

Here is another reply showing that it can, and maybe more importantly that many seem to think the S&P 500 has higher returns than it really does . . .

Yes, the wheel can beat the S&P 500. While this older post shows an exceptional return, it shows it is not impossible to do - https://www.reddit.com/r/Optionswheel/comments/oyovxk/the_wheel_vs_market_and_buy_and_hold_returns/

If you look on r/thetagang you will find a number of posts that show good returns like this one - https://www.reddit.com/r/thetagang/comments/18s7m1u/2023_wheel_strategy_results/

There are many more like the above if you look.

The thing is that returns are based on the trader and how they trade. Some trade poor quality stocks, others don't aggressively roll, or roll at all. Still others open ATM, some close losing trades or sell the shares right after being assigned, and many lose patience, so this means returns will vary dramatically based on the trader . . .

As I reply all the time. the S&P 500 has an annual historical return of 10% to 11%. See this or search yourself as this is well known - https://www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp

The page noted above shows "The average annualized return since adopting 500 stocks into the index in 1957 through Dec. 31, 2023, is 10.26%."

But let's look at a shorter timeframe. If you do the math since 2015 the S&P 500 has had a 12.8% return, which is only slightly higher than the historical 10.26% above.

Just in 2022 the S&P 500 LOST 18.01%! Had someone invested in the S&P 500 at the start of 2022 between losing -18% that year and then having a nice +24% recovery in 2023 the account would have barely broken even! Like most Buy & Hold styles of investment timing the market can make a huge difference, but with options you can mostly avoid this.

I am constantly surprised when posts and DMs come in with the flawed expectation that the S&P 500 has done better than reality . . . Where does this idea come from??

The question is not if the wheel can beat the S&P 500 as many routinely do. The question is if YOU can beat the S&P 500 with your trading plan, stock selection, style, management and risk tolerance?

Hope this helps. It is frustrating when this is asked all the time, and many just offhandly say the wheel can't beat the S&P without any proof. And no, the wheel cannot be fully backtested which is not as accurate as real trading, so backtesting is not proof.

What is more believable are the many traders who post of their success beating the S&P 500 most years, but more telling is that when looking at the numbers the S&P does not have the amazing returns many seem to assume.