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A few minutes before the closing bell I dipped my toe in the water and sold 5 naked p810 10/29 for 5.20 each. I’ve been looking at BPS too but there is still too much value in the long leg to produce an enticing net premium. Maybe those times will come again.
If we dip tomorrow or next week I’ll start selling more puts.
I’m still short 20 p750 for tomorrow. Why those have a 0.30 premium is beyond me.
If still too much value in the long leg, why not go to a 150 or 200 point spread? Or even a super wide 400 point spread would allow you to sell twice as many contracts as the naked puts for almost the same premium.
Huh?For me such big spreads are riskier than naked puts, because I need to open a lot of them to get the same premium. I have plenty of cash in the account so don’t really need the lower maintenance margin of those spreads.
This was super helpful, btw. Thank you! Still learning IB’s TWS…in IBKRs TWS you can do right click->financial instrument info->show margin impact. This gives you the amount of margin you will lose/gain on closing that position.
If i have ~100k in some call, then closing that call would give me something like 40k more margin (so the 100k in the call provide 60k margin compared to the 100k i would get if i turned them to cash).
this is different for each position, account, jurisdiction, etc.
i.e. on closing the 120k worth of ARKQ i would improve my margin only by 15k. So it is better to get 10% TSLA exposure from there than to just have it lying around as cash.
Huh?
The 400 Puts are cheap, costing around $0.10. So for your 5) puts you got $2,600 but tied up $405k in cash. You could sell 6) 400/810 BPS to bring in $3,060 while only tying up $246k of your cash. (One extra contract, 18% more return, 40% less cash at risk.)
Or you could sell 10) 400/810 BPS and bring in $5,100 while only tying up an extra $5k in cash. So essentially doubling your income with the same risk.
Situation: Trade in IRA/401k, keep 100% of profit, increasing the amount of leverage you have to build wealth faster. Then take out enough for living expenses, paying 10% penalty and then paying income taxes, but no capital gains tax.
This almost seems too good of a deal. Unless I’m missing something and they calculate capital gains tax on top of income tax upon early withdrawal.
Ok true, I guess I should have said same maximum risk. (Which is less likely with the naked puts.)But I don’t agree with the phrase ‘same risk’. If a black swan drops the stock to 600 overnight my 5 p810 will cost me $105,000. The 10 spreads 810/400 will cost me close to $210,000.
I’d long thought the 10% was prohibitively high penalty, but it certainly seems like a decent way to run things. Particularly if you keep your expenses low so your marginal rate stays low. I could almost get away with retiring just pulling from my IRA, but I‘d have to withdraw and pay taxes on health insurance as well which would ruin it all.Wondering if anyone trading in their retirement accounts considered paying the 10% penalty on top of the taxes owed to withdraw their gains early.
Also worth considering a ladder Roth conversion. After each rollover sits 5 years the converted amount can be pulled penalty free. You do pay tax on the rollover though.Wondering if anyone trading in their retirement accounts considered paying the 10% penalty on top of the taxes owed to withdraw their gains early.
I was reading this article about strategies to withdraw funds early.
How to Access Retirement Funds Early
My thinking is that you trade in the IRA/401k, let it grow faster without paying capital gains taxes, and then just withdraw it by paying 10% penalty + income taxes owed. In some ways, it seems better than using a taxable/brokerage account, where you may pay 40% in capital gains tax, reducing your growth potential. I’m not an accountant or tax professional, so I have no idea what the pros and cons are to this situation.
Situation: Trade in IRA/401k, keep 100% of profit, increasing the amount of leverage you have to build wealth faster. Then take out enough for living expenses, paying 10% penalty and then paying income taxes, but no capital gains tax.
This almost seems too good of a deal. Unless I’m missing something and they calculate capital gains tax on top of income tax upon early withdrawal.
Of course, the benefit of the Brokerage account is the access to margin you have, as you keep cash/shares and trade.
If he is on portfolio margin it may not require the margin equal to the full strike price. It’s equivalent at the current price for me as about a $250 spread.Huh?
The 400 Puts are cheap, costing around $0.10. So for your 5) puts you got $2,600 but tied up $405k in cash. You could sell 6) 400/810 BPS to bring in $3,060 while only tying up $246k of your cash. (One extra contract, 18% more return, 40% less cash at risk.)
Or you could sell 10) 400/810 BPS and bring in $5,100 while only tying up an extra $5k in cash. So essentially doubling your income with the same risk.
Wondering if anyone trading in their retirement accounts considered paying the 10% penalty on top of the taxes owed to withdraw their gains early.
I was reading this article about strategies to withdraw funds early.
How to Access Retirement Funds Early
My thinking is that you trade in the IRA/401k, let it grow faster without paying capital gains taxes, and then just withdraw it by paying 10% penalty + income taxes owed. In some ways, it seems better than using a taxable/brokerage account, where you may pay 40% in capital gains tax, reducing your growth potential. I’m not an accountant or tax professional, so I have no idea what the pros and cons are to this situation.
Situation: Trade in IRA/401k, keep 100% of profit, increasing the amount of leverage you have to build wealth faster. Then take out enough for living expenses, paying 10% penalty and then paying income taxes, but no capital gains tax.
This almost seems too good of a deal. Unless I’m missing something and they calculate capital gains tax on top of income tax upon early withdrawal.
Of course, the benefit of the Brokerage account is the access to margin you have, as you keep cash/shares and trade.
Thank you for the summary! I could not find the computation on the original thread #8725. Could you post a link here?if one thinks the lowest black swan sp is 650 and there is a broker cap of 750k (ie TD), 1,679-2,308 shares will take full advantage of 50% leverage given by shares. Shares 2,309-10,000 will be useless in generating recurring income unless they are used for CC (which is also trash prem) or stock daytrading.
View attachment 724029
Using only 50% of buying power at $3 prem/wk makes one a teslanaire (after tax) in one yr if one has 1,679 shares and assuming sp is constant.
View attachment 724033
View attachment 724035
Note:
- this is the perfect-world scenario and everyone makes the occasional weekly loss
- if there is no broker cap, then shares 2,309-10,000 also give leverage
computation found on original thread #8725
Long time lurker here.
Slightly OT:
A bit disappointed by premiums for next week (low IV), I looked at a pure Earnings play through IV crush for SNAP.
SNAP Earnings are today after close, IV for this week is currently around 190%.
Not-advice!
Cheers
Well... Those are leftovers after closing most things@Drezil If -900c and 900/750 BPSs are your risk off days, I can't imagine your risky days!
Look up rule 72(t)Wondering if anyone trading in their retirement accounts considered paying the 10% penalty on top of the taxes owed to withdraw their gains early.
I was reading this article about strategies to withdraw funds early.
How to Access Retirement Funds Early
My thinking is that you trade in the IRA/401k, let it grow faster without paying capital gains taxes, and then just withdraw it by paying 10% penalty + income taxes owed. In some ways, it seems better than using a taxable/brokerage account, where you may pay 40% in capital gains tax, reducing your growth potential. I’m not an accountant or tax professional, so I have no idea what the pros and cons are to this situation.
Situation: Trade in IRA/401k, keep 100% of profit, increasing the amount of leverage you have to build wealth faster. Then take out enough for living expenses, paying 10% penalty and then paying income taxes, but no capital gains tax.
This almost seems too good of a deal. Unless I’m missing something and they calculate capital gains tax on top of income tax upon early withdrawal.
Of course, the benefit of the Brokerage account is the access to margin you have, as you keep cash/shares and trade.
No better time for a BPS!I almost sold SNAP IC's 20% OTM for tomorrow for a 5% return.... the stock is down 21% . I am going to stick with Tesla only.
Isn't avoiding the few outlier trouble weeks the same as making money?CAN SOMEONE PLS TELL ME HOW TO MAKE $$$ NEXT WEEK? (not yelling)
this is all i have
View attachment 724061