Establishing passive portfolio with covered calls

Punle said:
Cabin111: I own a condo, but you probably meant buying a second one to rent? Like you said, free time is not on my side. I refused to buy a house because I can barely take care of my condo :p I did a quick look at Royce Value Trust, seems to have a very poor performance. But I do the drip principle myself. Every single dividend or interest I receive, I immediately put back in the market. Selling a leap is actually a good idea to think about. It's a more passive approach. Unfortunately, it barely pays and doesn't offer much downside protection as you probably have to wait around 2 months before the expiration to be able to buy it back low enough that it's worth it. I feel like having many many calls expire is better.
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Just a couple more things...I feel like a dad telling his kid what to do. If you have the condo you are probably ahead of most people. Even though you don't have the time...Be sure you maintain it well (roof, replace old floors, dry rot, termites, air conditioning/heater). Some of your investments in the condo can earn great return...And you are on top of it to see what is happening before your eyes. Do not buy another condo/townhouse!! You do not have time and being a landlord is a headache.

Concerning DRIPS...I don't believe the reinvestment straight into more stock would trigger a tax situation. You are just buying more stock straight from the dividend!! Have it grow tax differed...When you retire (and are at a smaller tax bracket) you can sell for a profit, but have less tax consequences. Many stocks (with dividends) allow drips...Found this read. Canada may differ on taxes...

https://www.google.com/url?sa=t&rct...vesting.aspx&usg=AOvVaw1_eVcquYRv3Ggl3hHna9AQ
 
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Regarding buying a second home, I agree, don't. I would suggest doing a wheel strategy in a non registered account instead. You could look at writing puts on 3x leveraged ETF's which would be better on your buying power and the premiums are nicer. Just don't go crazy and write puts on a parabolic bull market lol.
 
BlacknBlue: got it, I took your phrasing wrong. I'll look it up too thanks!

Cabin111: solid advice, I totally agree. There is a looooot of horror stories here with condos. The syndicate is pretty active, and we're all always in agreement of spending money when needed. We're also grouping ourselves together to make individual unit maintenance, making a company come once for all the units thus saving money and reminding each other. Thank you!
 
Punle said:
I’m trying to establish a repeatable, sustainable, no-market-timing strategy for the bulk of my portfolio. !
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Why not attempt a market timing model?
Yes, it's not that easy, but thats where the money is.

Alternative- look up dynamic hedging
 
Maybe one day, but I'm nowhere near the confidence on not messing up by doing market timing on 100% of my money (nor do I have the time to make enough analysis to do it). I also think it's way too random and never reacts the way it should to anything. But you're right, this is actually probably required, even to my covered call question.

I'll look up dynamic hedging. Not sure about what it includes, I'm thinking covered calls are one form of it?
 
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Essentially that is how most of us started when we dabbled in options:

Write covered calls, collect an income stream on stocks/etf/... we own. What is there not to like?

There are tons of books written on it as a sure way to generate income. After all, it is like selling insurance, insurance companies make lots of money selling insurance, What is there not to like?

There are also tons of websites advertising selling premium for income, like this one that said someone made $2.8M in 2 years starting with $80K in debt and he did it in his spare time. What is there not to like?

You should always think about who you are trading against. You think your counter parties are so nice, willing to provide you with an income stream?

Back in 2013, I wrote hundreds of covered calls in a six month span. Netted worse than just buy-&-hold, so I stopped, still gambled with options but did something different.

There is no free lunch. As @Maverick74 coached us: Writing covered call is not an edge.

Welcome to ET. You are a very thoughtful guy, we hope you can stick around and learn trading together with us amateur retails.
 
Thanks ironchef that is really good food for thoughts!!! It's totally accurate of what I'm constantly seeing. Yet, I usually come out of these websites with more questions than answers. At least a lot of people make it easy to filter them with their crazy claims!

It's been a while since 2013, were you able to find your own preferred strategy to beat the market?
 
Punle said:
Thanks ironchef that is really good food for thoughts!!! It's totally accurate of what I'm constantly seeing. Yet, I usually come out of these websites with more questions than answers. At least a lot of people make it easy to filter them with their crazy claims!

It's been a while since 2013, were you able to find your own preferred strategy to beat the market?
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Yes I beat the benchmark but I didn't have any "strategy". I got lucky, basically made a macro bet back in 2010: That this bull market coming out of the great recession was going to be a once in a generation thing and would far exceed everyone's expectation so traded accordingly.

Going forward, I don't know what will happen and have no strategy if the market turns. That is why I am camping out here.

Wish you the best.
 
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