No. for his eye, it would be easier and more effective just to sell covered calls right from the outset. It's what he plans to do anyway and he'd get better premium at the beginning when before the underlying drops and he gets assigned. The overall strategy as presented is sub-par.
Retired, 450k fun money, lets see what happens - SPY Options
- Thread starter Wise Old Man
- Start date
The funny part of this thread is all the talkers talk week after week While the Wise Old Man keeps ringing the register. I love this thread.
A good plan violently executed now is better than a perfect plan executed next week. - George S. Patton
A good plan violently executed now is better than a perfect plan executed next week. - George S. Patton
He does??
450K on options? unless you're a pro, why risk it? why not diversify into 8-10 dividend paying companies and DRIP?
I trade the 3x TQQQ, I do it because I understand it & because I bought my first round in July 2010.
https://www.splithistory.com/tqqq/
on the recent split 01/21/2021 a 2 for 1, at split price it was trading ~$100.
on that same day I looked at the ATM covered call expiring Jan 2022 was paying $29, that's 29% on the CC with a downside to $71.
some will say its crazy to trade 3x - are not suppose to be long term
does ^^^ make sense, is the strategy doable, are my numbers correct?
the added bonus is the trader could use the option premium to go back in buy more shares & option again or use multiples of $100k to do this type of trade.
even buying just 100 shares
there is also selling DITM long cc for a lesser % return on money at risk, yet this gives a better downside protection.
pre 2:1 split in 2021, on 2 Jan 2020 TQQQ was trading at ~$90.84, in March it hit a low of ~$35.50, ending 2020 at ~$181.80.
https://www.splithistory.com/tqqq/
on the recent split 01/21/2021 a 2 for 1, at split price it was trading ~$100.
on that same day I looked at the ATM covered call expiring Jan 2022 was paying $29, that's 29% on the CC with a downside to $71.
some will say its crazy to trade 3x - are not suppose to be long term
does ^^^ make sense, is the strategy doable, are my numbers correct?
the added bonus is the trader could use the option premium to go back in buy more shares & option again or use multiples of $100k to do this type of trade.
even buying just 100 shares
there is also selling DITM long cc for a lesser % return on money at risk, yet this gives a better downside protection.
pre 2:1 split in 2021, on 2 Jan 2020 TQQQ was trading at ~$90.84, in March it hit a low of ~$35.50, ending 2020 at ~$181.80.
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are you/will you outperform in 2021?
keep posting weekly YTD net after commissions
the table below the graph in the following link
https://www.macrotrends.net/2324/sp-500-historical-chart-data
The average stock market return is about 10% per year for nearly the last century. The S&P 500 is often considered the benchmark measure for annual stock market returns. Though 10% is the average stock market return, returns in any year are far from average.
Year-to-date return ~8.57%
5-year return 14.57%
10-year return 11.83%
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I unfortunately missed my trade on Thursday. I forgot Friday was a stock market holiday and my puts expired. Re-entered today for a small credit:
+$348
SOLD -12 SPY 100 (Weeklys) 9 APR 21 394 PUT @.29
My current net liq is $506,129.14, so after all commissions I'm up $50,011.02 = 10.96%. SPY closed today at 406.36, so I'm still underperforming the S&P 500 by 1.89%
It takes about 30 seconds per week so its not difficult or time consuming for me to trade the way that I am. As I've mentioned before, I don't need to withdraw the funds anytime soon. I'm definitely not saying this is the ideal strategy, but its an experiment I've been wanting to do for years and finally have the opportunity to do so. If I'm not successful, I'm 100% okay with it.