Supplement retirement income

[lightninboy]

I am doing it with stocks I am comfortable to hold if assigned. Do you use any specific searches or calculators?

Yeah, my wheel strategy is in my posts.

 

[vegamedic]

I am revisiting the Wheel strategy.

I have $200,000 invested on SPY. If I use the WHEEL approach, selling cash secured puts at 15-20 delta and covert calls if assigned, I will have ideally a 20% return a year. By turning the capital 3 times a week, SPY has 3 expirations a week, I will have the compounding effect to my favor and since I would use low delta low risk and low time exposure. In addition, I will probably be out of the market the night after expiration, farther reducing my risk exposure.

It looks that I would have a higher return this way than buy and hold, without any additional risk. It seems that I would reduce my risk in the expense of missing explosive moves to the upside.


Am I missing anything? Doesn't that beat by and hold SPY?

for starters, compounding doesn't work like that when you can only buy/sell options or SPY shares in integer increments

 

[The_Krakenite]

Skimming through this long thread, I am confused why this is an 'elite trader' forum, yet we are posting vids by very questionable self-declared youtube gurus?

Isn't Kirk one of many who never posts his true trading statements? I remember a thing a while back with past floor traders and investment bankers mentioning they had doubts about this guy even making winning bets from his suggestions.

If he has changed and does make his true statements public, then I'll apologize for doubting him too.

 

[aplino]

The day before expiration trader sells a 10 delta out of the money SPX put (about 60 points away of the current value) and buys the next strike for a $25 credit. He does that twice a week, he wins 90% of the time and he doubles his money in 10 weeks. Not bad at all.

Now the expected value of the trade is 25*0.9-475*.10 = -25. Trader would loose 500 in 10 weeks. Does not look good anymore.

Is the opposite trade possible?

 

[ironchef]

I've been doing wheels for several years on SPY on my 401K. While it's relatively conservative strategy and it works, it's very hard to beat just plain simple buy/hold SPY. Especially if you trade on taxable account. Just do dollar cost average on SPY/QQQ and occasional covered calls (when SPY is seriously overbought) would beat most of active traders. Believe me, I know.

And 20% easy annual return part is seriously showing how inexperienced you are. Don't ever try to lever unless you really know what to do. You will blow up 200K and a lot more.

Why? What do you think would be more realistic?

Name any funds or individuals with average annual 20% for last 10 years (proven, not their words). I am sure there are a few of them but probably most of them no. Even if you over-perform SPY some years, after tax (especially if you are in higher tax brackets) and time spent to place/manage trades, you under-perform SPY. I know this because my no trading 401K is doing just as good as my trading account (if not better) last 10 years. If I count the tax benefits, it's not even comparison.

Those of us who traded for a living since the great recession are so lucky. SPY returned >15% CAGR since 1-1-09 and QQQ is even better! It really doesn't take much to do better than 15% if you just bet with the market using a little leverage. Any method, be it wheels, buying options, selling straddles, buying butterflies.... that "beat" SPY in the last 10 years is probably just leverage because all it takes is to trade with an up bias.

I have been full time since 2010 and attributed my general successes buying/selling single legs options on names I own as a simple bull market play. I won't confuse my brain with a bull market.

 

[iloveksy]

Those of us who traded for a living since the great recession are so lucky. SPY returned >15% CAGR since 1-1-09 and QQQ is even better! It really doesn't take much to do better than 15% if you just bet with the market using a little leverage. Any method, be it wheels, buying options, selling straddles, buying butterflies.... that "beat" SPY in the last 10 years is probably just leverage because all it takes is to trade with an up bias.

I have been full time since 2010 and attributed my general successes buying/selling single legs options on names I own as a simple bull market play. I won't confuse my brain with a bull market.

That's why I told this guy to buy/hold, and sell occasional covered calls. Little work, beats most of the active traders. Trying to overdo with huge leverage as beginner is what blows the account or severely under perform SPY, which I saw a lot. Also even if a little better than SPY, after tax, viola... it's under performing buy/hold.

 

[qlai]

I won't confuse my brain with a bull market.

I both agree and disagree. One can loose a lot of money in a bull market or make a lot in a bear market.

I have been thinking a lot about this after 2020 was over. I rated myself at 50/50 - half skill and half bull market. My goal for 2021 is to improve that to at least 70% skill - taking the right actions at the right time.

 

[aplino]

I found this interesting

 

[ironchef]

That's why I told this guy to buy/hold, and sell occasional covered calls. Little work, beats most of the active traders. Trying to overdo with huge leverage as beginner is what blows the account or severely under perform SPY, which I saw a lot. Also even if a little better than SPY, after tax, viola... it's under performing buy/hold.

+++

 

[ironchef]

I both agree and disagree. One can loose a lot of money in a bull market or make a lot in a bear market.

I have been thinking a lot about this after 2020 was over. I rated myself at 50/50 - half skill and half bull market. My goal for 2021 is to improve that to at least 70% skill - taking the right actions at the right time.

This may be counter intuitive, but for us retails, the best approach in trading options is first keep things simple and second focus on watching the underlying as long as you are not day trading options or with a couple of days from expiration. That was the advice I got from @MrScalper a few years back and it served me well over the years.