This didn’t work out, so don’t try it. THESIS: Buy equal amounts of an ETF inverse pair. Dollar value of the hybrid position shouldn’t change much over time. Sell ATM Calls against it weekly to harvest the pure time value in the premiums. I had a crazy thought today while screening ETFs to be candidates for Covered Calls. I was aware of a few “inverse” ETF pairs: Siver, Gold Miners, and Biotech. But I’m finding there are others; many others. …
In late February 2022 I discovered ETFs that implement a covered-call (CC) strategy on the major indices. XYLD, QYLD, & RYLD cover the S&P 500, NASDAQ, and Russell 2000 respectively, and I’ve read that historically they pay dividends of about 10% per year. As of September 2022 each of them has a forward yield of more than 12%. That’s a very respectable return any kind of normal investment, and if you could get that year after year your account would …
Such as they are:
There are two parties in every options trade: a buyer and a seller, also called a writer. Buyers buy options, while writers create options and sell them to buyers. The key point to keep in mind is that option buyers as a group lose money over time, despite occasional lucky trades. At the other end of the table, options writers as a group make steady money despite occasional losses. Dr. Alexander Elder in The New Trading for a Living Dr. …
Get paid to wait for a stock to hit your buy-price. When you want to buy a certain stock, do you just go into the market and pay whatever it’s selling for at the moment (a Market order)? Nothing wrong with that, but I suspect most people will put in a Limit order to buy at a certain price, or at least wait for a pullback before buying, without a contingency order in place. Before introducing Cash Secured Puts (CSPs), …
I was talking to a coworker this past week who owns a lot of individual stocks for the long term. I explained to him how he could sell covered calls (CCs) on them, which would be an essentially risk-free* way to generate income from assets he already owned and was planning to hold regardless. (*With covered calls there are two supposed “risks”: 1) the stock price moves down; but that would happen anyway even if you didn’t sell calls against …
If you’re using a margin account AND it’s than $25,000 in value, you need to be aware of this rule. I use TD Ameritrade, but I imagine most are very similar, because it’s a FINRA rule (Financial Industry Regulatory Authority) that’s meant to protect us retail traders. Wikipedia says a Pattern Day Trader is someone who executes 4 or more day trades in 5 business days in a margin account (and the trades are more than 6% of their total …