I have an incredibly stupid idea but it sounds good in my head so I want the geniuses here to explain the downside.
So I wanted to trade DUST and NUGT, or similar inverse ETFs that have weekly options.
So my idea was to run the wheel on both at the same time. Since they are both trade against each other, I figure its like forcing a sideways situation. Obviously one will more likely hit the assignment than usual since it its gonna go down, whether or not it hits the strike is still a thing but I figure it works like this.
Obviously gold is a trending commodity, so whatever direction its trending, I eventually get assigned either way. Then I get to sell calls the following week into that trend on the assigned stock. This effectively lowers the cost average of the one I'm holding by both the premiums of the puts on the one still trending upwards, and the premiums of the one trending downwards. Effectively profiting while any direction besides sideways occurs, and profiting even more if it trades sideways.
I understand theres natural decay on leveraged etfs but I'm still researching which contradicting ETFs I can do this with.
Whats the downside here? I feel like its pretty minimal risk for consistent cash flow