Wheeled QCOM for 3.5 months. It was BORING until it dropped 25%.

I’m back for another weekly post part of my BORING CSPs series that I’ve been running and publicly logging weekly since Spring 2025, using real capital and real risk. I appreciate everyone who’s been following along! **If you just care about numbers, and want to move on, I'm sitting at +8.72% YTD with a max drawdown of 9.92% deploying an average of $85k a week. A more detailed YTD snapshot is posted at the end...** This post will be a bit different than my usual BORING CSP's as we've just experienced the worst part of the wheel strategy. The whole "collecting pennies in front of a steamroller". It's real... This post will be long and probably BORING because I break down EVERYTHING that went into my QCOM trade from start to finish: - The good: premium collection, dividends, grinding cost basis lower every week. - The bad: a 26% drawdown, staring at $7,900 in unrealized losses, months of sitting on your hands while Strait of Hormuz headlines make you question everything. - And the best: the eventual recovery and a profitable exit on a stock that got crushed for 3 months straight. Onto QCOM... --- Everyone talks about the wheel strategy like it's free money... Sell CSPs, get assigned, sell CCs, collect premium, repeat. Easy money. Until your mentals are tested when the stock tanks and you are sitting on a massive unrealized loss. Throw in a war or 3, some TACO headlines, and FURU's showing screenshots of 60% gains overnight and suddenly you're questioning every decision you've made and wondering if you actually know what you're doing - Maybe I should have bought GME 5/8 $25 calls instead..." You might even consider just buying to close at a massive loss to move money elsewhere. Are you even trusting the wheel strategy or are you just chasing premium and hoping the stock doesn't tank? --- **Before You Sell the First CSP** I see people on here all the time asking "what should I wheel?" and the answers are always just a list of tickers or the "only sell csp's on names you're willing to hold for a while" line. Which is TRUE, but really... what does that even mean? Very few people actually talk about the process of deciding whether a name belongs in a wheel portfolio. /u/scottishtrader is one of the few that immediately comes to mind. So before I get into the QCOM story, here's how I think about it. **Would you hold this through a 30-50% drawdown?** This is the first filter. Not "would I buy the dip if it drops 5%" but would I still believe the business survives and recovers if the chart gets truly ugly for months. QCOM dropped 26% on me. I held because the business wasn't broken. The price was just down, mostly on cautious forward guidance and Apple potentially replacing QCOM modems with their own. But the fundamentals didn't change. $10B+ per quarter in revenue, dominant in mobile chips, expanding into automotive and IoT. There was no "this company could be irrelevant in 5 years" risk. **There's a massive difference between selling CSPs on QCOM and selling them on high beta/high premium juicers like SOFI, HOOD, HIMS, ONDS, etc. Go ask the people who regularly wheel those how their YTD is going. What about their max drawdowns? Sure they might have some fat premiums but are they actually even close to profitable this year? They're most likely deep in the red right now and bagholding with no clear path out. Those names are way too volatile, the drawdowns are even sharper, and when they drop they can stay down for even longer. That's why I stick to boring instead of chasing premiums.** **Balance sheet survival** In a drawdown, the companies that recover are the ones that don't need to issue a ton of stock, cut essential investment, or refinance debt at terrible terms just to stay alive. Before selling the first CSP I want to see manageable debt, strong cash position, interest coverage that isn't fragile, and free cash flow that covers dividends and debt service. QCOM checks all of those. They only pay out about 30% of their free cash flow as dividends, they buy back billions in stock every year, and they're not going to get blown up by a credit crunch. That matters when you're sitting at -26% and the market is selling everything. I avoid names where a recession or rate spike could permanently impair the business. If the balance sheet can't survive a bad year, the wheel can turn into a death spiral. **Valuation and entry** A great company can still be a bad wheel entry if you sell puts when it's wildly overpriced. Before the first CSP, I ask: is the strike below a valuation level I actually like? Is my breakeven attractive or am I just staring at annualized yield? If assigned, am I buying at a price where future returns still make sense? Your real entry price is strike - premium received. The lower that breakeven is relative to fair value, the better your drawdown cushion. My first QCOM CSP was at the $167.50 strike. After premium, my breakeven was around $166.38. Not exactly deep value, but QCOM at $166 felt reasonable for where the business is headed. The second lot at $160 was even better. **Options liquidity and premium quality** I don't wheel illiquid chains. You want tight bid/ask spreads, good open interest near your strike, and easy exits if the trade moves against you. A boring stock with a dead options chain is annoying to manage. And high premium isn't automatically good. I see it all the time in this sub and other options related ones - "This week's high premium names blah blah". Sometimes it's high because the market is pricing in real danger. Earnings next week, FDA approval, fraud headline, /r/wallstreetbets squeeze, rumors, etc. That's not the kind of premium I want. The best premium in my opinion comes from normal IV on a stable large cap, temporary market-wide volatility, or broad sector weakness that doesn't break the company thesis. QCOM had decent IV from the pullback in January without any company-specific landmine. That's the kind of setup I want. **Dividends help. But only if they're sustainable.** A dividend isn't required for the wheel. But it helps when you're assigned and waiting for recovery. You'll see later how QCOM's $0.89/share quarterly dividend chipped away at my cost basis while I was sitting on a big unrealized loss. But watch out for yield traps. A 9% dividend yield on a stock that's collapsing because the business is deteriorating is not helping you. You want a dividend covered by free cash flow with a reasonable payout ratio. Not a dividend funded by debt on a melting business. **Position sizing** This one is huge and I don't see it talked about enough. These two QCOM lots tied up about $32,750 in capital for me. That's a meaningful position, but it was not my entire portfolio. I was still making moves with the rest of my money. I was still selling CSPs on other names, still collecting premium elsewhere. QCOM being down 26% was painful but manageable compared to the rest of my portfolio. A wheel portfolio full of semis or all high-beta tech might look diversified by ticker but it's not diversified by risk. Spread it out into other sectors and industries. **Have a plan before assignment, not after** Before the CSP, you should already know: will I sell CCs immediately? At what strike? Above cost basis only, or am I willing to go below? Will I average down or never add? What would make me exit entirely? If you would panic after assignment, it wasn't a good CSP in the first place. My plan for QCOM was simple. If assigned, sell CCs at or above my cost basis when premium is decent. If the stock drops hard and CC premium near my cost is garbage, do nothing and wait or start selling CC's below my original cost but near my adjusted cost basis. Don't sell aggressive CCs below cost just to generate income. Many of those who did this with QCOM are regretting it right now - I promise you that. Trust the business and be patient. --- **The Setup (mid-January)** Like I said above, QCOM was pulling back from the $180 area in early January. It passed my checklist. So I sold CSPs across a couple accounts. Got assigned fast: - **Lot 1**: 100 shares at $167.50 strike (assigned Jan 15, stock was already at $161) - **Lot 2**: 100 shares at $160.00 strike (assigned Jan 23, stock was at $155) Also closed one more CSP for a quick ~$67 profit before assignment. Total CSP premium collected across all the QCOM CSPs: about **$310**. At this point I'm holding 200 shares. Average cost around $163.75. Stock is trading around $155. Already in the red. It is what it is... --- **The Grind (late January - early February)** Started selling covered calls immediately on the assigned shares. Struck them mostly around $165-$170 on Lot 1 and $160-$165 on Lot 2. IV was still decent from the pullback so premiums were reasonable. Through the rest of January I was actively managing CCs. Selling, buying back early when they decayed, re-selling. Nothing fancy. Just grinding. Between both lots I collected about **$650 in CC premium** in about two weeks. One trade on Lot 2 was a $160 strike CC I sold for $2.24 and bought back for $0.01 when the stock dropped hard through the strike. That single trade netted $223. Then February 5 happened. QCOM gapped down from $149 to $133 at the open and closed at $136. Now I'm holding 200 shares with a ~$163.75 average and the stock is at $136. That's about **$5,500 in unrealized losses**. The CCs I had open expired worthless or I bought them back for pennies. Full premium kept. Small consolation. --- **Doing Nothing (February)** This is the part nobody talks about on here. QCOM bounced around $137-$145 for the entire month of February. My cost basis was $163-$167.50 depending on the lot. I could have sold CCs at $140-$145 strikes but the premium was trash at those levels and if the stock snapped back I'd be locking in a massive realized loss getting called away 20 points below my cost. So I did nothing. For a full month. No new CCs. Just held my shares. This is where most people blow up the wheel. They see the red on the screen and they panic. They either dump the shares for a loss or they sell aggressive CCs at low strikes to "make some of the money back" and then get called away, turning a paper loss into a real one. I didn't do either because I knew what I owned. QCOM is printing billions in free cash flow. They weren't going bankrupt. The business hadn't changed. The price changed. Those are two different things. So I sat on my hands and waited. --- **The Ugly Grind (March - early April)** By March, QCOM started drifting even lower. Hit the $130s. Then the high $120s. It bottomed around **$124 on April 7**. My Lot 1 cost basis was $167.50. Stock at $124. That's a **26% drawdown** from my cost. At the absolute low, my unrealized loss across both lots was roughly **$7,900**. But I resumed selling CCs in March at lower strikes. $150. $145. $140. The premiums were small. Like $17-$45 per round per lot. That's maybe $25 average per trade. With 200 shares I was pulling in roughly $50-$100 per week. It's not exciting. No FURU's are posting $25 premium screenshots on Reddit or X. But every dollar chips away at the cost basis. From March to early April I collected another ~$400 in CC premium across both lots. Still grinding. --- **The Dividend** March 26, QCOM paid its quarterly dividend. $0.89 per share. On 200 shares that's **$178**. Another $0.89/share off my cost basis on each lot. This is one of the reasons you wheel dividend-paying companies. You get paid to wait while the stock figures itself out. --- **The Recovery (mid-to-late April)** Mid-April QCOM starts creeping back up. $128, $131, $133, $136. I stopped selling CCs around April 6. Didn't want to cap the upside right before a potential move. Felt like the selling pressure was exhausting itself. For about 2.5 weeks I'm just sitting there. No CCs. No premium. Just holding and watching. Then April 24. QCOM gaps up to $149 from $134 the day before. I immediately sell $170 CCs on both lots. Then April 30. QCOM gaps up AGAIN. Opens at $172, runs to $187 intraday, closes at $179. After 3.5 months of grinding, bag-holding, and collecting nickels and dimes, my shares are above my cost basis. Above my CC strikes. Just like that. --- **The Exit** **Lot 1**: My $170 CC got assigned on May 1. 100 shares called away at $170. Done. Position closed. **Lot 2**: When QCOM blew through $170, I had to manage the CC. Bought it back for a loss, immediately re-sold a new $170 CC expiring the following week for a much fatter premium. Net positive on the roll. With QCOM sitting at $177, this lot is almost certainly getting called away Friday. --- **The Math** This is the whole point. Here's how premiums and dividends ground down my cost basis over 3.5 months: **Lot 1 (100 shares at $167.50):** | | Per Share | |---|---| | Original cost basis | $167.50 | | CSP premium | -$1.12 | | CC premium (10 rounds) | -$4.56 | | Dividend | -$0.89 | | **Adjusted cost basis** | **$160.93** | | Called away at | $170.00 | | **Profit per share** | **$9.07** | | **Total lot profit** | **~$907** | **Lot 2 (100 shares at $160.00):** | | Per Share | |---|---| | Original cost basis | $160.00 | | CSP premium (2 trades) | -$1.98 | | CC premium (8 rounds + 1 roll) | -$7.16 | | Dividend | -$0.89 | | **Adjusted cost basis** | **$149.97** | | Called away at (projected) | $170.00 | | **Profit per share** | **$20.03** | | **Total lot profit** | **~$2,003** | **Combined**: ~$2,900 in total profit on ~$32,750 in capital over 3.5 months. That's roughly **8.8% return**, or about **30% annualized**. On a stock that dropped 25% on me. --- **The Lesson** At the worst point I was staring at $7,900 in unrealized losses. I had collected about $1,300 in premiums and dividends by then, which softened it, but I was still deep in the hole on paper. The only reason I held through that was conviction in the business. Not some vague "I like the stock" feeling. Actual fundamental conviction. That's the real lesson here. For me, the wheel works best when it's BORING. When you're wheeling a company you actually understand, that you've done the work on, that you know is generating real cash flow and isn't going anywhere. The premium collection is secondary. The stock selection is everything. --- [YTD Performance Snapshot](https://www.mlabstrading.com/portfolio_snapshots/mlabs-portfolio-snapshot-2026-05-02.png)