SPY Covered Calls - What is a good strategy to use in a Roth IRA when holding SPY?

[David Donner]

I just found out brokers allow covered calls in a Roth IRA.
Currently I only hold SPY in my Roth IRA.
What is a good strategy to use for covered calls to add some juice to the returns I get from SPY?
Anyone have any good ideas?
I know what a covered call is by definition, but not a good strategy to use as far as expiration dates and what not to do on a regular basis.

 

[ironchef]

What is a good strategy to use for covered calls to add some juice to the returns I get from SPY?

Covered calls have no edge over buy and hold. Play long enough your outcome will net you zero over buy and hold, minus the costs of commissions and slippages. Been there done that.

There is no free lunch. To get an extra return over buy and hold, you need to have an opinion different from the market's opinion and your opinion is more correct.

Once you understand that, you can make money selling options, or buying them instead or trade combinations....

I converted to buying instead of selling since 2014.

Good luck and best wishes.

 

[David Donner]

Covered calls have no edge over buy and hold. Play long enough your outcome will net you zero over buy and hold, minus the costs of commissions and slippages. Been there done that.

There is no free lunch. To get an extra return over buy and hold, you need to have an opinion different from the market's opinion and your opinion is more correct.

Once you understand that, you can make money selling options, or buying them instead or trade combinations....

I converted to buying instead of selling since 2014.

Good luck and best wishes.

I am not looking to sell the SPY I have, just looking to out of the money covered calls to gain more income.

 

[ironchef]

I am not looking to sell the SPY I have, just looking to out of the money covered calls to gain more income.

There is no free lunch sir.

In general it is a zero sum game and your counter party is likely a professional who is a lot smarter. Why does he want to give you his hard earned money?

Over a long period, if you simply mechanically buy or sell options, it is a very hard to beat holding the underlying. If you are serious, get a book on options, study it, study the market & develop your edge.

 

[getthatintoya]

Create syn short straddle models and performs better than CC. For every 100 shares you have sell 2 20 delta quarterly calls against it. Roll if call strike is touched or close whole position. On a strike touch you will make money just not as much as not having the short calls.
if you can't have any short options then buy a teenie way otm.

 

[mervyn]

delta 10 or 15 on weekly, easily 20% per annum but you have to roll forward immediately if the strike is hit. And use the premium to accumulate underlying at market price.

 

[traider]

Create syn short straddle models and performs better than CC. For every 100 shares you have sell 2 20 delta quarterly calls against it. Roll if call strike is touched or close whole position. On a strike touch you will make money just not as much as not having the short calls.
if you can't have any short options then buy a teenie way otm.

what happens on a huge rise? do we close whole position or roll? that is the make or break of this strat

 

[Cabin1111]

I have done covered calls for about 25 years...I've learned a lot.

You can look at my thread over the years...Cabin111 (I'm now Cabin1111).

I now do two different cover calls...And that is it.

1. WAY out of the money CCs. For just a small amount of income.

2. The other is a little strange...Just out of the money leaps.

I'll give you an example of that second one. When Google hit below $93. I bought it at $92.70. I then did a leap for about $1,670. for the Jan 24 $93...About 15 months out. Did I care if it got called away...I did not. A built in 20% return if it got called away. If Google was at $80. when the option expired, I still would be ahead of just a money market fund during that time...

This is just me...

You may just want to park some money in a US Treasure/money market fund. When the market drops, buy QQQ or SPY...Just hold on. They throw out the losers and add future gainers...

 

[murray t turtle]

I just found out brokers allow covered calls in a Roth IRA.
Currently I only hold SPY in my Roth IRA.
What is a good strategy to use for ............... juice to the returns I get from SPY?
Anyone have any good ideas?

%%
Ideas follow, but not a prediction+ some decay abit, nota problem with a sellin' plan.
NoT in UPRO as of reg market close , but good trender in an uptrend
SPYG not exactly as liquid as SPY but plenty liquid;
some times does better[but better or worse drawdoWn on doWnside also many times.LOL ]
Like Iron chief [aka iron chef]said ''no free lunch'';
except , mom + girlfriend 's mom may give you free lunch if polite LOL.
QQQ can do better but not as liquid as SPY= ''liquidity leader''
All can work well in Roth.
Have some money market funds sold some mm [exits] today

 

[Cabin1111]

%%
Ideas follow, but not a prediction+ some decay abit, nota problem with a sellin' plan.
NoT in UPRO as of reg market close , but good trender in an uptrend
SPYG not exactly as liquid as SPY but plenty liquid;
some times does better[but better or worse drawdoWn on doWnside also many times.LOL ]
Like Iron chief [aka iron chef]said ''no free lunch'';
except , mom + girlfriend 's mom may give you free lunch if polite LOL.
QQQ can do better but not as liquid as SPY= ''liquidity leader''
All can work well in Roth.
Have some money market funds sold some mm [exits] today

I put your post into AI...Next I should try Des!!

Based on the given text, it appears that the writer is discussing various investment ideas and strategies. They mention specific stock symbols such as UPRO, SPYG, SPY, and QQQ, indicating potential options for investment. The writer acknowledges that there may be some decay or potential drawbacks associated with these ideas but also highlights their potential benefits. They mention the concept of "no free lunch, "suggesting that all investments come with risks and potential trade-offs. Additionally, they mention the possibility of selling money market funds. Overall, the text seems to be a casual discussion about investment ideas and plans.

PS I used one of my longest threads to see what happened. AI, for the most part
said..."except for a few areas, I don't know what this guy is talking about"!!