Wheeling in 2020 and Choosing the Right Platform: WeBull vs. Robinhood

In all the Theta Gang strategies videos I have shared so far, the #1 strategy inquiry I receive is this: how can I start running the wheel, and what platform should I use to do it?

tl;dr: The wheel is a strategy I fully endorse and believe everyone with a share portfolio should use the it. WeBull is better than Robinhood for wheeling, but until WeBull allows spreads, it is NOT universally better than Robinhood. The only consequential advantage of Robinhood over WeBull is that the former currently supports level-3 options, whereas the latter only supports levels 0-2 currently with plans to support level-3 later (this does not affect wheel traders). Everyone should participate in WeBull’s papertrading platform, which offers Amazon gift cards based on your performance ($1 for every 1% gain in your papertrading account, calculated weekly – literally free money!).

WeBull referral link:  https://act.webull.com/k/AnbDvt5WlL5E/main 

Does the wheel deserve this level of praise?

I am happy to see a high level of interest in the wheel. I use it extensively and the income from selling covered calls and cash-covered puts has funded much of my stock portfolio. 

For example, this week, I sold a GOOGL $1,115 covered call expiring Friday for $3,450 premium and bought a $1,240 call for $250 as a hedge. My effective income from that covered call is $3,200. That’s serious income from the wheel, and these premiums can be used to accumulate additional shares (I bought 100 shares of SPXS with the GOOGL premium).

Those who are familiar with the wheel know what happens next: my GOOGL covered call will either:

1) Expire worthless, in which case I will keep my $3,250 premium and sell another one next week;

2) Get assigned, in which case I will sell a $1,115 cash-covered put expiring next week for more premium.

Wheeling GOOGL has provided me consistent income to build a portfolio. And even if you can’t afford the $110,000 for Alphabet shares, this same methodology works with almost any stock, albeit at a different scale.

As markets get rattled, I endorse those bears who have made a killing with their puts and choose to invest some of their profits into beaten-down shares. Those traders will do well to assume sizeable stock positions for wheeling in the future as markets settle into their new rhythm.

What is the best platform for wheeling?

Traditionally, Robinhood has been the preferred platform, however this time has passed. Those of us who have used Robinhood will not forget the series of outages last week that cost users mountains of cash. I typically do not like when people blame their brokers for their losses, but Robinhood’s failure to provide for clients is unacceptable, and it is time to move to a different broker

For that, I recommend WeBull as the #1 broker for wheeling in 2020. It shares many of the same features as Robinhood, such as:

1) $0 commissions on trades and assignments;

2) A wide range of equities;

3) High-level encryption and formal registration as a broker-dealer to protect your information and secure your funds from fraud/lockouts;

4) No minimum account funding requirements; and

5) Supports covered calls and cash-secured puts (wheel).

However, WeBull has Robinhood beat in several areas:

1) Minimum value of the free stock rewarded on depositing is $12, as opposed to Robinhood’s $3. WeBull’s maximum free stock reward value blows Robinhood’s out of the water with a $1,400 cap. Users who open and fund accounts are eligible for 2 free stocks on WeBull ($2.50-$250 for opening account and $12-$1,400 when making a deposit) Learn more about WeBull free stocks: https://www.webull.com/activity?source=WIP_ww;

2) WeBull offers over 20 technical indicators like RSI and MACD, which Robinhood does not support;

3) WeBull does NOT charge a $5 monthly fee for margin access, unlike Robinhood which has commodified margin with Robinhood Gold;

4) WeBull has phone support, while Robinhood does not. Try reaching Robinhood for support when their systems are down;

5) WeBull offers short selling, which Robinhood does not; 

6) WeBull offers Roth and Traditional IRA accounts, which Robinhood does not. WeBull even offers bonuses for those who use it for their IRA holdings, with a $50 bonus for those who deposit $5,000 (<2020’s federal limit) and $3,300 for those who move $100,000 or more. Learn more about WeBull’s IRAs: https://www.webull.com/ira?source=WIP_ww;

7) WeBull services a wider range of countries than Robinhood, which can help non-US traders get involved. Learn more about Webull’s platform: https://www.webull.com/?source=WIP_ww; and

8) WeBull offers a papertrading platform, unlike Robinhood. WeBull papertraders can also earn rewards in the form of Amazon gift cards (more on this in another article).

Above: Papertrading competition on WeBull, which offers Amazon gift cards of varying amounts based on performance.

Is Robinhood still better than WeBull in any areas?

Yes, there are three areas in which Robinhood has a leg-up on WeBull:

1) Robinhood currently offers cryptocurrency trading. WeBull is launching its cryptocurrency platform in the near future, but there is a waitlist for most users. Despite Robinhood having crypto trading currently, it is just price speculation; you cannot deposit or withdraw crypto. Robinhood is likely using its own internal trackers to manage its crypto trading rather than sending any orders on behalf of its clients through the network for recording on the blockchain, so it is not a fantastic feature. I cannot confirm that WeBull will do otherwise, but I am optimistic that WeBull will seek to 1-up Robinhood.

2) Robinhood supports level-3 options trading, while WeBull only offers levels 0-2. Effectively, you cannot trade spreads on WeBull in a single order. This does NOT affect wheel traders who only require access to level-1. I do anticipate WeBull upgrading to level-3 support later this year, however they are not supported at present.

3) Robinhood hand-holds new traders and is suitable for people who want to trade with no background knowledge. You can probably learn to use Robinhood in a few minutes, whereas it would take a few hours of digging to learn how to use WeBull’s features. This is not an issue for anyone who is willing to invest some time in learning how to use WeBull’s resources or anyone with prior trading experience. Likewise, trading with no background knowledge is not a good approach, thus Robinhood’s hand-holding can backfire on overly-eager traders.

Do the platforms share any weaknesses?

Yes, they both share a weakness in that neither are associated with a physical bank. As such, neither offers interest rate boosters on savings accounts, waived fees on home purchasing costs, or personal checks. This is unlikely to change for either brokerage in the foreseeable future.

Mikey’s Plan

I anticipate moving the Robinhood $3k Challenge to WeBull for season 2. I do this with the assumption that WeBull will support spreads by the summer. I will move my cryptocurrency holdings from CoinBase to WeBull provided the broker offers this service. 

My Merrill Edge account will stay where it is because of the banking benefits I get from it (better credit card rewards, waived closing fees on home loans, priority customer support, and a savings rate booster). However, I do anticipate that WeBull’s benefits may ultimately offset these advantages if it continues to add more features, at which point I will reassess this decision.

Summary and Recommendation

WeBull is a superior platform to Robinhood in most ways. WeBull offers a wide variety of tools that Robinhood does not support; this is especially true regarding technical analysis tools. Further, WeBull has better customer support, more incentives for account opening, and has an attractive papertarding account that offers the opportunity to earn gift cards. However, WeBull does not offer level-3 options trading. While this does not affect wheel traders, it does affect traders who wish to use spreads. This will change in the future, but I cannot confirm when.

I highly recommend WeBull over Robinhood for those who want to trade the wheel and buy calls/puts. I will recommend WeBull over Robinhood to everyone once WeBull supports spreads. I anticipate moving season 2 of the $3k challenge to WeBull. If you are hesitant, get your feet wet with a $100 deposit, take advantage of WeBull’s papertrading competition to earn Amazon gift cards while learning the platform, and get a feel for the platform with your $100. If that is too much, make the minimum $1 deposit, get your free stocks, papertrade, and see if you are ready to upgrade from Robinhood.

I strongly recommend everyone open a WeBull account and participate in their papertrading platform. This offers you an opportunity to earn Amazon gift cards based on your performance (every 1% gain in the papertrade account equals $1 of Amazon cards – max $100/week- sent to your email). The competition continues weekly and gift cards are sent every month. There is no reason not to participate in this. Literally free money!

Disclosure

The attached link is Mikey’s affiliate link to WeBull. He does not receive shares for your using his link. However, he does receive $5 from WeBull for every opened account and $30 for every funded account (does not compound with opened accounts). Mikey is was offered $100 of compensation to write 300 words describing WeBull's new promotional programs, but decided to write this post for equivalent compensation instead.