Retired, 450k fun money, lets see what happens - SPY Options

[sysdevel99]

well there is a way to do it - you sell into the volatility so he should be selling calls not puts - you get more premium "selling people a chance the market will go up as they can see it's going up" they will pay more for the calls than anyone would the puts. he was only able to sell the puts because they were cheap for someone to buy.

if he sold calls >

then if the market spikes up he should roll forward if he has to. then as the market heads down he would leg in the puts.

Not easy selling naked calls in a roth IRA. I know tastyworks offered for a while but not sure they still do - TDA/Schwab, IB don't - who would you use for that?
Here's where they originally announced but then they had some hiccups afterwards.
https://www.tastytrade.com/tt/shows/strategies-for-ira/episodes/short-calls-in-an-ira-07-10-2019

 

[deltaf0rce]

Yes exactly, so if I get assigned at expiration I'll purchase 1300 shares at $348 each, totaling $452,400. My cost basis will be 347.44 a share due to the premium from the short puts, not factoring in commissions. From there I'll sell covered calls against it until the shares get called away. Rinse and repeat.

You could take 125k from your Roth, buy 3,000 shares of spy for the same amount and keep this game going, you know that right? And if you hedged it right you get all your capital back.

 

[Wise Old Man]

well there is a way to do it - you sell into the volatility so he should be selling calls not puts - you get more premium "selling people a chance the market will go up as they can see it's going up" they will pay more for the calls than anyone would the puts. he was only able to sell the puts because they were cheap for someone to buy.

if he sold calls >

then if the market spikes up he should roll forward if he has to. then as the market heads down he would leg in the puts.

I was actually looking at selling ATM covered calls today for the premium alone but decided to go for the traditional way of running the wheel by selling cash secured puts.

Are you implying selling covered calls or selling them naked? I’m assuming naked because if I already had the shares then I couldn’t leg into the puts. I’m with TD Schwabatrade and they don’t allow naked calls in an IRA. Selling ATM covered calls may be something to look into if the market continues to breach new highs.

 

[deltaf0rce]

well there is a way to do it - you sell into the volatility so he should be selling calls not puts - you get more premium "selling people a chance the market will go up as they can see it's going up" they will pay more for the calls than anyone would the puts. he was only able to sell the puts because they were cheap for someone to buy.

if he sold calls >

then if the market spikes up he should roll forward if he has to. then as the market heads down he would leg in the puts.

Selling spy calls into rising volatility. What could go wrong there?

 

[MarkBrown]

do - TDA/Schwab, IB don't - who would you use for that?

i don't have a ira so you would have to shop around.

considering an ira though you could use short puts as a entry vehicle for getting long stocks at a better price and hope that you never get exercised. but if you do get exercised you get the stock at a better price and you keep the premium that you collected when you sold the puts.

 

[Overnight]

...I’m with TD Schwabatrade ...

Lol, I thought it was called TD AmeriSchwab.

 

[MarkBrown]

Selling spy calls into rising volatility. What could go wrong there?

well that's exactly how you make billions, you have to work at it and know how to defend the position. i would only sell futures myself and then defend with a mini or roll forward in twice the numbers.

if you are well funded and know what your doing you can never lose selling options, unless you get over-leveraged and have to liquidate for a margin call. i would say 10-1 back up so if you had 100mm then you put at risk 10mm.

i know to someone who only is seeing the risk it sounds nuts but this is the way big boys make their money. they embrace the risk and get paid well, the public runs from the risk and the lose everything. it will never change because more people are dumb and afraid than brave and smart.

my butler is telling me dinner is ready so gotta run cheerio good man...

 

[MarkBrown]

wonder how those puts are going that you sold on the high?

by friday they will be in tha money....

you're supposed to sell into the volatility not away from it.

 

[deltaf0rce]

wonder how those puts are going that you sold on the high?

by friday they will be in tha money....

you're supposed to sell into the volatility not away from it.

Perhaps he should sell calls down here like you were going for

 

[Wise Old Man]

wonder how those puts are going that you sold on the high?

by friday they will be in tha money....

you're supposed to sell into the volatility not away from it.

There’s more than one way to skin a cat. Assignment isn’t always a bad thing. For someone who worked for the “worlds biggest options trader”, I’m surprised you don’t understand this.