Quitting day job to collect weekly premiums - realistic?

[zdreg]

Most ridiculous thing I ever heard. Thanks for providing the liquidity though.

why?

 

[water7]

Here's a question: If that's your investment strategy, why quit your day job? Once you have your list of companies you are use, it takes less than 10 minutes a week to enter your orders.

could be less

 

[Sig]

I think the right answer is "how much do you spend?"

Someone who's spending 20k a year can comfortably retire on with a nest egg of 800k. So maybe the answer is to cut expenses rather then try to come up with better trading strategies.

You don't need to be rich to enjoy life. But $20k a year puts some pretty severe restrictions on where you can live and what you can do. If it works for you then good on ya, but definitely not for everyone or even most everyone. There are far easier ways out I the rat race than living as an ascetic.

 

[tiddlywinks]

Terrible idea. You are much better off selling the index puts. There are no "safe" stocks. If you are under 35 and want to take the risk of selling premium, fine. You have your whole life to go back to work and make it back. If you are over 35, don't do this shit. If you lose 50% of your money and you are in your 40's or 50's, you are not terribly employable and the shock from the event will keep you from ever touching the market again.

My uncle, RIP, retired with about 3.5M, from which he used to generate income with mostly options. He maintained around 20% cash at all times. He had 1M for long equities as core holdings. All remaining monies, about 1.5M, was used for writing covered and/or naked, and collecting premium. He did well until 2007. Everyone is a genius in a raging bull market. He lost over half of the account and was forced to downsize his and his families lifestyle before his death.

Now, my widow aunt, in retirement, does roughly the same thing. With the exception she does not call the shots, the account is managed, through Credit Suisse. She is doing well, generating about 150K annually. For herself, it's a good living, without want. She is hands off day to day almost entirely. But yet, everyone, Credit Suisse included, is a genius in a raging bull market.

Trade On.

 

[Sig]

Why bother to do this yourself, just buy one of several ETFs that engage in this strategy, PBP, HSPX, QYLD, VEGA are a few. Also, you can look at the history on these and see how you would have done, quick and cheap backtesting.

 

[qxr1011]

I think the right answer is "how much do you spend?"

Someone who's spending 20k a year can comfortably retire on with a nest egg of 800k. So maybe the answer is to cut expenses rather then try to come up with better trading strategies.

the right answer is - have working strategy...
if strategy is not working nothing will help

 

[Stymie]

when's the last time you sailed the mac regatta ?

Not done the Mac when working in Chicago. Sydney Harbour and Thailand. Better night life!

 

[viruscore1]

Not done the Mac when working in Chicago. Sydney Harbour and Thailand. Better night life!

Sold the boat, but backup farr 40 mainsail still in the attic. Never been to Sydney but visited Thailand many times. Would like to get a nordhavn motorsailer

 

[SoesWasBetter]

A lot like selling powerball tickets without turning them in to the state (keeping the money)

You will probably win, but you might lose big

 

[Stymie]

My uncle, RIP, retired with about 3.5M, from which he used to generate income with mostly options. He maintained around 20% cash at all times. He had 1M for long equities as core holdings. All remaining monies, about 1.5M, was used for writing covered and/or naked, and collecting premium. He did well until 2007. Everyone is a genius in a raging bull market. He lost over half of the account and was forced to downsize his and his families lifestyle before his death.

Now, my widow aunt, in retirement, does roughly the same thing. With the exception she does not call the shots, the account is managed, through Credit Suisse. She is doing well, generating about 150K annually. For herself, it's a good living, without want. She is hands off day to day almost entirely. But yet, everyone, Credit Suisse included, is a genius in a raging bull market.

Trade On.

Agree.
Where the strategy fails is when the positions are too big and markets drop. You have too assume that stocks can drop 90%. You have to be able to average down on a position at that point. This allows you to make considerably more after a major event. But how many people want to leave a large portion of their portfolio in cash? How many people believe that their stocks can be expected to drop 90%? It is the unrealistic expectations and the reality of unexpected events which cause these liquidity events. It's hard to take a long-term view and accept the drag of cash.

If you sell both a call and put against your stock then you can collect twice the premium which will cushion the downside and improve the return on capital over time. This strategy avoids the need to go back to the market to unwind the trade reducing commission and avoiding those market makers who provide crappy markets. When one side approaches zero you have the option to buy it back for a nickel and change the payoff graph to your advantage otherwise let it expire and the stock be called away or double down by selling another straddle with high premium.