That's an interesting concept.Look into the “wheel method”.
See, that's one reason I don't play stocks any more. I buy and hold SPY. Even so, I do pay attention to how it's doing and I do pay attention to news of all kinds and have a pretty good feel for the market. But watching my holdings and going through those emotions... I just don't have time for that. I have too many other things to do, I have priorities. BTDT, I swear. So many stocks, generally really great stocks with terrific fundamentals, great growing earnings, top performers, and still, I didn't do as well as the general market. More than buying at the right time (which I did do plenty), I didn't understand selling. Well, how else do you explain it? Maybe it was market insiders screwing me, I mean, that's what people say. The retail investor really doesn't have the inside track.Alright I just bought 281 shares of BB at $14.24, a $4001 buy in with JP Morgan broker just for something for me and maybe some others here to follow for the next 45 minutes or so.
edit: Ah up $50.
Update: and now down $52
Update: down $48 and with that I'll hold it to see it if bounces back in after hours.
It's hard to say because option premiums depend on the stock and its IV, market VIX, and other things. And I don't know your risk taking and risk tolerance levels and how aggressive strike price and dates you're going to sell and play. And I don't know how good of a trader you are with options because when you enter the option trade and when you exit matters great deal with the premium you receive and how much you keep. You're talking 1x to 10x difference in premium received on the same calls in some cases. That said, I think account size of around $500k can net you about $10k/month if your good. The bigger account like $1 million+ is obviously helpful and easier. But I'm talking about just selling covered calls and cash secured puts here. Not option trading in general. If you're good with options and know what you're doing, the sky is the limit if you use the full arsenal of tools and not just basic theta selling strategy.I'm starting to understand all of this: in a sense I'm selling liquidity (if I want to play it safe). But it almost seems to make it easier to form a trading strategy: if I'm OK with buying in at X price, I sell a cash covered put to buy at that price. If I'm OK with selling a position at Y price, I sell a covered call to buy at that price.
I can also see the focus is income generation if you're trading them - but that doesn't necessarily mean that's best for net worth growth. It's kind of trade-off: for example selling a put could go wrong in the short-term, likewise with selling a covered call could miss further gains. BUT... if you're planning on either buying something today at X price, or willing to sell something at Y price within the future you can use options to generate income on that. Both cases seem to hedge your bets: limit downside and potential upside, but it seems to favor income generation because you're selling time/liquidity. I make stupid decisions day-trading anyway so I might as well collect premium doing nothing.
Now watch the stock market blow up as I figure this all out thanks to GME!
@ponyo, how much capital is required to reliably generate $10k/mo off options? You're right about the taxes part too, though I'm thinking about using this strategy to try to grow a portion of my retirement tax free or deferred accounts too.
I don't think margin account is technically required to sell CSP. So it could just be your broker. I don't think you can have margin account in IRA and you're allowed to sell CC and CSP in IRA account. But I think that's the highest level option trading they will allow in retirement account.I haven't done a thing with options just yet, I did try to sell a CSP on $PLTR end of last year which would have paid out for me at the time (I.E expired worthless). But I was restricted due to not having a margin account.
Any idea why a CASH secured put requires margin? Seems they could just reserve the cash until the put expires. Wondering if that's just my broker or if that's a standard thing.
Potentially scary stuff if you read through its entirety (linked site & linked sites links) (TLDR at end):
TLDR: The theory is that everyone buying into $GME is exposing that more shares are publicly available than should be mathematically possible based on the number of shares issued by $GME themselves. This would expose long-known but failed to be proven (due to capabilities to hide the numbers by HF's, MM's and the like) corruption as to the level of counterfeit shares being created on a regular basis across the entire market. While not yet conclusive, the numbers do appear very compelling.
TLDR: The theory is that everyone buying into $GME is exposing that more shares are publicly available than should be mathematically possible based on the number of shares issued by $GME themselves. This would expose long-known but failed to be proven (due to capabilities to hide the numbers by HF's, MM's and the like) corruption as to the level of counterfeit shares being created on a regular basis across the entire market. While not yet conclusive, the numbers do appear very compelling.
Gold market is too large. The rich boomers own gold. But silver market is tiny. It's why the Hunts brothers tried to corner and was initially successful corning the silver market.Pretty crazy. It's crossed my mind to buy physical silver or gold actually. How does one go about doing that? I don't imagine I can just walk up to a gold mine and buy it directly right? They probably only sell ingots and that is way more money than I would be willing to spend lol. I think if you can pick it up off the table with one hand they let you have it though.
That's great if you have that kind of liquidity to cash in on those gains and the price doesn't continue to fall if the puts are exercised. I'm still trying to grow my portfolio to something that could churn that way, but am still focused on getting my stupid house paid off before putting more of my monthly income into the cause. Hopefully 2022 will be my year if I can boost my savings so the ball will roll easier by next January.I think the current trends are great. All of the retail traders want to buy puts, I want to sell them. Econ 101.
Why in the world do you think a March call for IRTC shot up to $3000 yesterday? On $14,500 worth of stock? The retail guys piled in thinking IRTC would shoot back up and drove up the price (They were right).
Talk about a trade with no losers:
1) They get their speculative put which has turned out well
2) I get my $3000, which is all I wanted.
There's a place that buys gold and gold jewelry down the block from where I live....so getting my money back would be super easy. If I get a gold bar and want to only sell part of it, what do you use? A cheese grater?You can buy physical gold and silver from online retailer like Silvergoldbull in Canada.
https://silvergoldbull.ca/
Thanks for the heart felt and detailed explanation. Personally, I don't think I've ever traded in options. Maybe one or two innocent ones, not sure, I have some knowledge, a good book, but may never go further.It's hard to say because option premiums depend on the stock and its IV, market VIX, and other things. And I don't know your risk taking and risk tolerance levels and how aggressive strike price and dates you're going to sell and play. And I don't know how good of a trader you are with options because when you enter the option trade and when you exit matters great deal with the premium you receive and how much you keep. You're talking 1x to 10x difference in premium received on the same calls in some cases. That said, I think account size of around $500k can net you about $10k/month if your good. The bigger account like $1 million+ is obviously helpful and easier. But I'm talking about just selling covered calls and cash secured puts here. Not option trading in general. If you're good with options and know what you're doing, the sky is the limit if you use the full arsenal of tools and not just basic theta selling strategy.
$10k/month is $120k a year. That's 12% return on $1 million account. Or 24% return on $500k account. Theta gang strategy is generally conservative so I think as long as you can beat the S&P 500, that's a win and should be the goal and not $10k/mo. Because fixating on a number will cause you to make mistakes, chase, and enter bad trades. Don't fall in love with Theta gang. What happens is when people first learn about the "wheel" option strategy, they get all excited and fall into the trap this is free money, can't lose strategy of making money after first couple wins and seeing it work in real life. But options are priced at certain price for reason. To make really huge market beating return with theta gang, you have to take really huge risks like naked selling which defeats the purpose of the theta gang. And if you naked sell, all it requires is one "rogue wave" or Black Swan event to kill you. I can't stress enough how dangerous selling naked call is. It's same as shorting using leverage. Just don't do it no matter how tempting selling those call premiums look. That's weapon of mass destruction and will eventually blow up your account and put your family in ruins if you get unlucky. I'm giving this warning because almost everyone just first start selling covered calls trying to make some extra money and slightly juice their overall portfolio return. But it's like the Dark Side of the force and temptation will be there once you start learning how powerful option can be. Greed is a terrible thing and often leads you down the Dark Side of the force. Selling naked calls is the Dark Side and it will be super tempting to just do it once. That's what you'll tell yourself. And you'll likely score. But then get greedy. And keep going back to the well and keep scoring. But a day will come when you least expect it when the whole thing blows up in your face and everything you worked so hard and slowly gained get all wiped out and more on one simple bad naked calls sell. It will kill you. I've been there and experienced it. It didn't kill me but it hurt me bad. Several times. And I keep telling myself every time it happens I won't ever do it again, but it's like any addiction. It's hard to stop once you start and see the power of the Dark Side of the Force. And that's what selling naked calls and naked puts are. Weapon of Mass Destruction for your portfolio.
The challenge here is that, together, these guys are at the core of keeping the market functioning (primarily Citadel in the 2 you named). If they go bust, brokers and retail customers for sure will be impacted, and very likely cause a ripple of massive turmoil in the market place.It seems like this is the only way out: SEC or whoever arranges buyouts of GME. Government bails it out. Citadel, Melvin et al all go to jail. Make an example of them. That's about the only way I can see confidence being restored in the markets. Otherwise if they try to crash markets to get diamonds hands to dump their GME positions, this can all end catastrophically.
I'm a bit nervous too, and just have to remind myself I'm about covered from every angle: equities, PMs, crypto, cash, and a low rate mortgage. Edit: Oh and of course my 1 share of GME.
You can buy physical gold and silver from online retailer like Silvergoldbull in Canada.
https://silvergoldbull.ca/
The challenge here is that, together, these guys are at the core of keeping the market functioning (primarily Citadel in the 2 you named). If they go bust, brokers and retail customers for sure will be impacted, and very likely cause a ripple of massive turmoil in the market place.
There will be no easy solution to this, even though the obvious answer feels like it would be to hang them out to dry. How ironic people rely on the guys screwing them over?
and the possible need to add a means for safely storing/hiding the bullion. a decent fire rated safe is probably a few hundred dollars if not moreOh right never even considered tax. You probably are better off to buy on paper if doing it for investing. If you just want the novelty of having the physical thing I guess you would need to pay the 13% premium by having to pay tax too. And guess there is probably a casting premium too, ex: the actual cost of casing and making it.
Gold market is too large. The rich boomers own gold. But silver market is tiny. It's why the Hunts brothers tried to corner and was initially successful corning the silver market.
If paper silver market like SLV moons because of this, this will help Citadel as it looks like they recently took large long position in SLV. I'm conflicted because I own decent amount of physical silver so I would like to see the physical silver prices go up. But not if it helps Citadel. I want Citadel to die and Ken Griffin to die too.