topic Re: I was today old when I learned... in Personal Finance

I was today old when I learned...

markbeiser — Wed, 27 Nov 2024 22:47:50 GMT

...that you can trade options inside a Roth IRA!
24 years of contributing to it, and I never knew this.

Of course I only started learning about how to do options trading when I was 2 weeks ago old, and don't know enough to fully realize what I don't know yet, so I'm not going crazy with this new found knowledge.
I at least try to be self aware enough to not be in contention for any Dunning-Kruger "Top Left" awards!🤣

Re: I was today old when I learned...

FeeBear — Thu, 28 Nov 2024 01:49:47 GMT

Bro, I do option trading and all I have to give you this advice, don't do it. It is the easiest way of losing alot of money very quickly. Don't get me, it can be profitable but it can be heart wrenching. If you wanna see people destroy their lives on option bets look up a youtube called Kamikaze Cash and watch his recount how people have taken a bit of knowledge and have ruined their life.

Now if you decided not to heed my warning above dear god stick simple strategy like sell calls or selling put. In these cases (Selling Calls, you have 100 shares and you are basically betting your stock doesn't go past your strike price or selling puts (Where you are hoping a stock price doesn't go below a certain price where you would be obilgated to buy 100 share/Per Option.) Look up the wheel strategy and all this will make more sense. Good Luck

Re: I was today old when I learned...

Xanthos472 — Thu, 28 Nov 2024 03:14:46 GMT

@markbeiser wrote:
...that you can trade options inside a Roth IRA!
24 years of contributing to it, and I never knew this.

Of course I only started learning about how to do options trading when I was 2 weeks ago old, and don't know enough to fully realize what I don't know yet, so I'm not going crazy with this new found knowledge.
I at least try to be self aware enough to not be in contention for any Dunning-Kruger "Top Left" awards!🤣

I do this a lot. Google selling covered calls. I sell out of the money strikes at prices I would be happy to sell the underlying at.

Re: I was today old when I learned...

markbeiser — Thu, 28 Nov 2024 10:12:45 GMT

@Xanthos472 wrote:
I do this a lot. Google selling covered calls. I sell out of the money strikes at prices I would be happy to sell the underlying at.

Yeah, I did that with a block of Tesla shares in my CMA account this week, since it is the only thing I have 100+ shares of in there.
I'm more than happy to collect $123 to not sell them at $385/share this week, but wouldn't have been upset if they did, even though capital gains would have stung a bit!
Next week I'll be able to do similar with the 1000 shares in my Roth IRA, and since there is no capital gains worry, I may get a little cheeky with a couple of the calls.
I'm mostly going to stick to collecting relative chump change until I find something much cheaper, and a bit less volatile, to try a wheel strategy on.

Re: I was today old when I learned...

markbeiser — Thu, 28 Nov 2024 10:13:46 GMT

@FeeBear wrote:
Now if you decided not to heed my warning above dear god stick simple strategy like sell calls or selling put. In these cases (Selling Calls, you have 100 shares and you are basically betting your stock doesn't go past your strike price or selling puts (Where you are hoping a stock price doesn't go below a certain price where you would be obilgated to buy 100 share/Per Option.) Look up the wheel strategy and all this will make more sense. Good Luck

I'm sticking to collecting relative chump change selling out of the money covered calls on my Tesla stock for now, as it is the only thing I have more than 100 shares of.
I'm looking for something MUCH cheaper and less volatile to do a wheel strategy with to get a feel for things.

Re: I was today old when I learned...

FicoMike0 — Fri, 29 Nov 2024 14:13:44 GMT

I've had some luck too. I've alternated selling puts and calls on one week options. Example, stock is at $22, id like to buy at $20, sell a $20 put for $1. Contract expires unexercised, I make $100 on a $2000 investment, 5% in one week. Do it again next week, this time contract exercised, Im assigned the stock at $20. The third week, I sell a covered $20 call for $1. With any luck, the contract is exercised. I'm back to my original cash position on the stock, up $300 from premiums, 15% in three weeks. If course, I don't always get a 5% premium, but it happens. The real risk is the stock tanking while I'm holding it. I've gotten stuck for several weeks a couple of times, just have to be patient.

Re: I was today old when I learned...

Blender — Fri, 29 Nov 2024 19:22:41 GMT

@FeeBear wrote:
Bro, I do option trading and all I have to give you this advice, don't do it. It is the easiest way of losing alot of money very quickly. Don't get me, it can be profitable but it can be heart wrenching. If you wanna see people destroy their lives on option bets look up a youtube called Kamikaze Cash and watch his recount how people have taken a bit of knowledge and have ruined their life.

Now if you decided not to heed my warning above dear god stick simple strategy like sell calls or selling put. In these cases (Selling Calls, you have 100 shares and you are basically betting your stock doesn't go past your strike price or selling puts (Where you are hoping a stock price doesn't go below a certain price where you would be obilgated to buy 100 share/Per Option.) Look up the wheel strategy and all this will make more sense. Good Luck

Its true when they say traders become introverts bc they dont have anyone to talk to about it simply bc people dont understand it.

Im looking to trade full time by mid year. As long as you have good risk management, understand market structure, and the most important: patience, the dream can become a reality. Im in year three and I will have my first profitable year trading almost daily. Its so rewarding when you beat the emotions.

@markbeiser if you want talk options at anytime let me know!

Re: I was today old when I learned...

markbeiser — Sat, 30 Nov 2024 01:42:27 GMT

@Blender wrote:

Im looking to trade full time by mid year. As long as you have good risk management, understand market structure, and the most important: patience, the dream can become a reality. Im in year three and I will have my first profitable year trading almost daily. Its so rewarding when you beat the emotions.

@markbeiser if you want talk options at anytime let me know!

Thanks!
I already figured out that there is nobody in my circle of friends to talk to about it, most of them are fairly financially ignorant, like $1000+/mo truck payment, with little to no emergency fund or retirement savings kind of ignorance.

This week I got paid not to sell 100 tesla shares in my brokerage account.
Next week I'll try getting paid not to sell the same 100 shares again, and not to buy 100 new shares in that account, and to not sell 1000 shares in my IRA!🤣
Too chicken to go for big premiums, happy with out of the money loose change for now.
The universe gave me a gift in 2019-2020, I'm not looking to tempt it to take it back...
I've used margins to "buy the dip" on shares of stocks I hold long term before when I didn't have cash, but I'm not going there with options trading yet.

I also need to figure out what I want to shift around to make blocks of 100 shares of some of the other random stuff I've been holding in my IRA for a while.

Re: I was today old when I learned...

FicoMike0 — Sat, 30 Nov 2024 00:50:04 GMT

I look for stocks with more than 100% volitility, but demonstrate modest long term change. I just collected $100 on 5 rum $6.5 puts expiring 12/06. Rum closed at $7.07. I'm hoping I'll be paid $100 to not buy 500 rum at $6.5. If I'm assighed, I'll be selling 5 rum $6.5 calls on 12/09.

Re: I was today old when I learned...

markbeiser — Sat, 30 Nov 2024 01:33:48 GMT

@FicoMike0 wrote:
I look for stocks with more than 100% volitility, but demonstrate modest long term change.

I'm still working on how to evaluate stocks for options trading.
I've always been a long term buy and hold person, so not sure I'm ready to jump into trading options on any stocks I would not have otherwise liked to own long term.

Re: I was today old when I learned...

Im-back — Sat, 30 Nov 2024 03:47:56 GMT

A couple years ago I felt pretty smart and started selling covered call contracts. Eight months later I had nine contracts called for a company that everyone would recognize. Shortly after I realized even focusing full time, I can't compete against the institutional investors. Shortly after, I stopped trading options and haven't looked back.

If your feelin extra sporty I suggest you start playing with MSTR options. Now that SEC has started allowing bitcoin options it like gasoline has been thrown on MSTR. Me, I'm too faint of heart.

Re: I was today old when I learned...

markbeiser — Sat, 30 Nov 2024 14:00:09 GMT

@Im-back wrote:
A couple years ago I felt pretty smart and started selling covered call contracts. Eight months later I had nine contracts called for a company that everyone would recognize. Shortly after I realized even focusing full time, I can't compete against the institutional investors. Shortly after, I stopped trading options and haven't looked back.

If your feelin extra sporty I suggest you start playing with MSTR options. Now that SEC has started allowing bitcoin options it like gasoline has been thrown on MSTR. Me, I'm too faint of heart.

Yeah, I fully accept that there is no way I can compete with proffessional investors, not now or ever, especially not institutional ones who can and do manipulate markets in their favor.
I'm just after the table scraps for the most part.
Your story about getting all your shares called away is the kind of thing I'm considdering about my Tesla positions, I don't actually want to lose them, so I may end up only playing with 1 call and 1 put at a time.

I looked at MSTR, holly cow the premiums look tempting, but it is the kind of stock that can wreck you in a flash, so no, just no.

Re: I was today old when I learned...

IsambardPrince — Sun, 01 Dec 2024 00:40:08 GMT

@markbeiser wrote:
...that you can trade options inside a Roth IRA!
24 years of contributing to it, and I never knew this.

Of course I only started learning about how to do options trading when I was 2 weeks ago old, and don't know enough to fully realize what I don't know yet, so I'm not going crazy with this new found knowledge.
I at least try to be self aware enough to not be in contention for any Dunning-Kruger "Top Left" awards!🤣

Unfortunately Walmart's 401(k) is inside Bank of America, which is utter crap. They listed my spouse as "Female" when he is a man and then made us talk to Walmart HR about fixing even that. Every once in a while you log in and it says the account balance is $0. Then it's back.

They have passive funds, and they pretty much all suck. They even have a bond fund that somehow manages to underperform AGG.

I'm sure that Walmart works with BofA even though they're terrible because they took bids on who would charge the lowest fees to Walmart, of course BofA is always reaching in and grabbing management fees for their funds that underperform.

I wish there were some active ways to day trade other than moving money around some funds. Employers could work on this, but I doubt they ever will. The law should let you direct retirement contribution matches to wherever you want them.

About the only reason why switching us over to a Roth might make sense is if our taxes fall so much due to wages not keeping up with inflation (which has been happening, a lot) that we're left with no real tax burden anyway and so a Roth means tax-free growth, and that's a real possibility in the next few years I think.

If taxes fall to zero or very close, probably the only place for them to go in the future is up.

The problem with the Incoming Regime's tax and spending programs is that it'll be a national version of Illinois Governor Edgar's "Pension Holidays/Ramps" (AKA, the "Edgar Ramp") and "Tax Deferrals" back in the 90s, and then it's raining crap on us 30 years later. The only solution becomes higher and higher taxes when the adults are back in the room and the bills come in.

Just as the Edgar Ramp didn't mean the State of Illinois didn't owe pensions, tax cuts don't mean that the federal government will spend less or not incur bills. It just means that the bill comes later, with sharp tax hikes.

So what does that mean for a 401(k) or 403(b)?

It means that if tax policy drops your tax rates significantly over the next 10 years or so, consider switching to Roths for new contributions and then switch back to Traditional later on if the rates go up again. Traditional doesn't help if you don't owe taxes, but you will owe tax later if your investments grow.

For most people, the real value in a company-matched retirement account is the match and tax optimization, which lets them double their contributions and shield them from taxation (either now or later), not so much the growth in the indexes.

If you go by growth in the indexes over the last 4 years, then your investments didn't actually grow at all, they just got repriced in inflated Dollar terms.

People baked in a set of assumptions, which assumed that the federal government would be stable enough that our money didn't turn into something like a banana republic's and now that that assumption did not hold, they come back out of retirement looking for work.

Re: I was today old when I learned...

FicoMike0 — Sun, 01 Dec 2024 00:44:12 GMT

@markbeiser

That's part of my stratagy. I see a stock at $7.25 would I buy it at $6.50? If so, I sell a $6.50 put on it. I usually go with an expiration a week away. With no change in stock price, every day that passes after I sell, the option is worth less. If it expires worthless, no lose. If I'm assigned, I'm selling a covered call at the same strike price. As long as the bottom doesn't fall out, I make money.

Re: I was today old when I learned...

markbeiser — Sun, 01 Dec 2024 02:20:57 GMT

@IsambardPrince wrote:
Unfortunately Walmart's 401(k) is inside Bank of America, which is utter crap. They listed my spouse as "Female" when he is a man and then made us talk to Walmart HR about fixing even that. Every once in a while you log in and it says the account balance is $0. Then it's back.

They have passive funds, and they pretty much all suck. They even have a bond fund that somehow manages to underperform AGG.

Do they not let you select how to allocate your investments in the 401k, or is it just that the selections suck?

28 years ago I worked at a place with a 401k plan, and they gave us a choice of letting the fund manager allocate things for you, choosing from a list of things they recommended, or with restrictions on how often you could make changes, picking what ever the heck you wanted and the percentages of contributions to each thing.

Until a couple of years ago I had my Roth IRA in a managed account, glad I ignored their strong recommendation against it when I directed them to switch $15k over to 60 shares of Tesla stock in 2019, as that has become 900 shares!
I switched to a self directed account in 2022 and have been very happy not paying someone to adhere to their "fiduciary responsibility" rules.

Re: I was today old when I learned...

markbeiser — Sun, 01 Dec 2024 02:29:28 GMT

@Im-back wrote:
If your feelin extra sporty I suggest you start playing with MSTR options. Now that SEC has started allowing bitcoin options it like gasoline has been thrown on MSTR. Me, I'm too faint of heart.

I don't know if I should thank you or curse you for bringing up MSTR, but I've been looking into it all day and have half talked myself into YOLOing a 1 week put for 1 contract of it.
The premiums, for puts way below and calls way above the strike price are just crazy...

Re: I was today old when I learned...

IsambardPrince — Sun, 01 Dec 2024 04:42:37 GMT

@markbeiser wrote:
@IsambardPrince wrote:
Unfortunately Walmart's 401(k) is inside Bank of America, which is utter crap. They listed my spouse as "Female" when he is a man and then made us talk to Walmart HR about fixing even that. Every once in a while you log in and it says the account balance is $0. Then it's back.

They have passive funds, and they pretty much all suck. They even have a bond fund that somehow manages to underperform AGG.

Do they not let you select how to allocate your investments in the 401k, or is it just that the selections suck?

28 years ago I worked at a place with a 401k plan, and they gave us a choice of letting the fund manager allocate things for you, choosing from a list of things they recommended, or with restrictions on how often you could make changes, picking what ever the heck you wanted and the percentages of contributions to each thing.

Until a couple of years ago I had my Roth IRA in a managed account, glad I ignored their strong recommendation against it when I directed them to switch $15k over to 60 shares of Tesla stock in 2019, as that has become 900 shares!
I switched to a self directed account in 2022 and have been very happy not paying someone to adhere to their "fiduciary responsibility" rules.

The funds are just bad.

Re: I was today old when I learned...

Realist — Sun, 01 Dec 2024 06:12:08 GMT

I see what you guys are doing here, so I'll ask the following question. Either you are already doing this and know this by default, or you aren't taking advantage of maximum opportunity available to you. I've heard no one mention in this topic.

Do you guys know how to chart read or how to apply TA? If you don't, I would recommend you learn. It's like a looking glass into the likelihood of stock market movements, and while it's not 100%, it's absolutely more solid than nothing at all.

I can look at a stock chart, toss up a few indicators and overlays, and make an educated guess to decide what the stock is most likely to do. This in turn, whether up or down, allows you a bit more confidence in your options strat. I'm a fan of taking advantage of maximum potential, when possible. I highly recommend, and apologize if you already utilize this.

Re: I was today old when I learned...

markbeiser — Sun, 01 Dec 2024 09:38:59 GMT

@Realist wrote:
I see what you guys are doing here, so I'll ask the following question. Either you are already doing this and know this by default, or you aren't taking advantage of maximum opportunity available to you. I've heard no one mention in this topic.

I'm just taking my first steps into it, so have a lot to learn.
I'm not trying to maximize gains at the moment, just keeping it simple so I don't blow anything up.
I've been doing DCA long time on stocks I wanted to keep long term, and never even looked at options trading, so have a LOT to learn, it requires a very different way of looking at stocks.
Now I'm 56 and on plan to retire at 62, or maybe sooner, so need to learn how to replace my income.

Re: I was today old when I learned...

Im-back — Mon, 02 Dec 2024 04:20:42 GMT

@markbeiser wrote:
@Im-back wrote:
A couple years ago I felt pretty smart and started selling covered call contracts. Eight months later I had nine contracts called for a company that everyone would recognize. Shortly after I realized even focusing full time, I can't compete against the institutional investors. Shortly after, I stopped trading options and haven't looked back.

If your feelin extra sporty I suggest you start playing with MSTR options. Now that SEC has started allowing bitcoin options it like gasoline has been thrown on MSTR. Me, I'm too faint of heart.
Yeah, I fully accept that there is no way I can compete with proffessional investors, not now or ever, especially not institutional ones who can and do manipulate markets in their favor.
I'm just after the table scraps for the most part.
Your story about getting all your shares called away is the kind of thing I'm considdering about my Tesla positions, I don't actually want to lose them, so I may end up only playing with 1 call and 1 put at a time.

I looked at MSTR, holly cow the premiums look tempting, but it is the kind of stock that can wreck you in a flash, so no, just no.

Only got 1/3 called. But it still stung. Still stings. Big taxable gain and lost opportunity.