How to re-invest my premium.. thoughts

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IndyJonerJr

hi guys

I’m starting to get to the point of way more then I need to cover daily expenses.

Wondering thoughts how I should reinvest the premium I took in? I was thinking just to set tax money aside for two and a half months on what I do ( credit spreads ) but the other money I’m trying to figure out how to redeploy. Because technically 75% of that premium is redeployable if I do covered call as that margin opens up on IB 75% of stock price. If I held treasury it’s 100% but....

Only thoughts right now is to do covered calls on a stock I wouldn’t mind holding if I needed for a very long term. This of course I don’t know what week or month I should do it on if that even is what I should do. I only have knowledge of weekly covered calls. The premium doesn’t look horrible a year out but I have no clue if the stock gets called away if it goes ITM or is the buyer holding to make an better gain. Which wouldn’t be bad for dividend also but I just have knowledge in weekly covered calls..

My background is puts so I have no knowledge if people recommend debit spreads or debit plays.

Another thought is to pull a percentage into closer OTM plays. But should result in more panic and losses

Another idea is to learn to play more aggressive stragaties as that is also not my experience. But once again a learning experience as I’ve had one loss ever over two years. So lossing might start making my mental game sidetracked. Was thinking aggressive earnings plays???

Let me hear your thoughts. All ears as I love learning.
 
Sell cash covered puts ATM for 13-15% premiums for 5-6 months out. You have to look at sub $10 stocks to find those kinds of payouts. CHK and AKS are two examples (I've been playing them for 2 years). I sell them on decent pullbacks, willing to go 2 or 3 rounds if the decline is greater than anticipated (aka staggered selling as new strikes go ATM). Because you are 13-15% ahead of the current price then so is your averaged-in price. Most likely you don't get put the stock on all of your positions so the other prems go to lower your cost avg even more on the stock acquired. Either way, you get a great cost avg, win-win whether you get the stock or not.

Anything less than 13% prem for 6 months out is not worth the risk, imo. For me, has to be in a company which produces a product in constant demand. Also, this isn't a game of keep-away. I'm okay with owning the stock for several years.

This strategy works really well in an IRA where there are no taxes on the prems taken in.
 
I'd look into strategies that have different payoff structures than your current strategy. If your current strategy is just long stock, maybe look to add other asset classes or do market neutral type trades. Add a strategy that is strong in a market environment where your current strategy is weak. Always a good idea to diversify.
 
Thanks guys.

Think I’m settling with just long Apple stock. And sell some covered calls far OTM. I use to play around and have never hit ITM when I don’t want to. I want to keep Apple stock and in the event it gets called well then I lost nothing really.

Seems the easiest and I still technically get more margin to play with ( 75% ) at IB. So I’ll just keep adding more and more spreads every month. Also get dividends and just keep throwing it all back onto Apple.
 
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