Supplement retirement income

[Aquarians]

Do I have to look for covert covered calls now?

Covert trading strategies involving calls, definitely.

In fact if someone has a very profitable trading strategy, they sometimes choose to keep it covert. This means they don't trade through a single broker so no broker has their full position.

For instance if the wheel were a fantastically profitable system that you just discovered and the world doesn't know yet, then you'd sell calls through Ameritrade, puts through Tastytrade and buy stock through Interactive Brokers. Overall you'd be printing money but the account at each broker would not look particularly conspicuous: lose some, win some... just a regular trader, nothing unusual about it.

Therefore: covert calls

Hell I think you can patent the term and charge a royalty from everyone using it from now on. Rush now to https://www.uspto.gov/ and register it!

 

[Cabin111]

Covert trading strategies involving calls, definitely.

In fact if someone has a very profitable trading strategy, they sometimes choose to keep it covert. This means they don't trade through a single broker so no broker has their full position.

For instance if the wheel were a fantastically profitable system that you just discovered and the world doesn't know yet, then you'd sell calls through Ameritrade, puts through Tastytrade and buy stock through Interactive Brokers. Overall you'd be printing money but the account at each broker would not look particularly conspicuous: lose some, win some... just a regular trader, nothing unusual about it.

Therefore: covert calls

Hell I think you can patent the term and charge a royalty from everyone using it from now on. Rush now to https://www.uspto.gov/ and register it!

I might be wrong...The stock drops 20%. In order to cover, your covering position is at another broker. It takes 2 days to clear the trade. Then you have to wire the money $$ to the other broker. Could this be a problem??

 

[newwurldmn]

I am looking for ways to supplement my retirement income with low risk.
I have a trading account with $200,000, and I know the basics on options ( covert calls, cash secured puts, vertical spreads, straddles, strangles)
I have been trading stocks very lightly for years with no consistent results.

I would be happy with a 20% return.

I would appreciate any suggestions on how to approach this task and how to educate myself more on this matter.

Aplino

the best of us would be happy with a consistent 20percent return.

Trading is deceptive. It’s easy to click buttons and it’s easy to confuse luck with skill. Options even more deceptive because of the asymmetric payouts.

Start small (because you will lose money and likely blow up) and study how your risk and pnl changes in real time. After a few years will will be ready to go bigger.

If you are really smart and clever you can speed up the learning curve and maybe cut it down to a year but there’s only one active poster who has been successful at doing that and he’s not on this thread.

 

[caroy]

I might be wrong...The stock drops 20%. In order to cover, your covering position is at another broker. It takes 2 days to clear the trade. Then you have to wire the money $$ to the other broker. Could this be a problem??

Thankfully I don't have to worry about routing my one lots through multiple brokers to avoid my my position being known. One day......

 

[Aquarians]

I might be wrong...The stock drops 20%. In order to cover, your covering position is at another broker. It takes 2 days to clear the trade. Then you have to wire the money $$ to the other broker. Could this be a problem??

Like Caroy says, when you'll have this problem, you'll also know how to solve it

 

[qlai]

the best of us would be happy with a consistent 20percent return.

Is that really true for retail trader? It's definitely true for large AUM money managers who shoot for risk-adjusted returns. They care more about draw downs, benchmarks, correlations, and fees than absolute returns.

Let's say 2021 was a great year for a retail trader where he/she made 50% return by boldly investing/trading FAANG stocks. Let's say for the next six years he/she makes only 5% on average. That's 23% average for the seven year period.

So in context of this thread - managing retirement money for income - I can sell premium allocating 20-60% of my money and "enjoy" 80-100% win rate until there's prolonged bear market. In this case, my income stream just stops and I'm no worse than any other buy-and-hope investor. Maybe even better because I should still have some cash available to invest. Where's the hole in this thinking?

 

[newwurldmn]

Is that really true for retail trader? It's definitely true for large AUM money managers who shoot for risk-adjusted returns. They care more about draw downs, benchmarks, correlations, and fees than absolute returns.

Let's say 2021 was a great year for a retail trader where he/she made 50% return by boldly investing/trading FAANG stocks. Let's say for the next six years he/she makes only 5% on average. That's 23% average for the seven year period.

So in context of this thread - managing retirement money for income - I can sell premium allocating 20-60% of my money and "enjoy" 80-100% win rate until there's prolonged bear market. In this case, my income stream just stops and I'm no worse than any other buy-and-hope investor. Maybe even better because I should still have some cash available to invest. Where's the hole in this thinking?

the world doesn’t work this way.
Stop thinking in hypotheticals and look at actual market data pre-Covid.

Covid has created dislocations and opportunities on so many levels that will only occur once in a decade.

edit: your OP said “low risk.” What does low risk mean to you?

 

[qlai]

OP said “low risk.” What does low risk mean to you?

True, I missed that point completely. I can't speak for OP, but for my retirement account, being down on SPY is more of an opportunity cost than risk of loss, provided I don't need these funds while in draw down. In other words, I will never sell at a loss for as long as I live and pass this "problem" onto my kids

 

[newwurldmn]

True, I missed that point completely. I can't speak for OP, but for my retirement account, being down on SPY is more of an opportunity cost than risk of loss, provided I don't need these funds while in draw down. In other words, I will never sell at a loss for as long as I live and pass this "problem" onto my kids

you want to take equity style risk for a long term account. that's reasonable but unlikely you will earn the 20%/year the OP is looking for

 

[qlai]

Is this correct?