Stock Trading

[MrPiper]

This is what I do. It is NOT investing advice.


In an IRA I don't care whether or not they get called out because there is no tax consequence. I use mega corp blue chips like PFE BP etc... as an example I just ran a 14 day call on PFE at .44 on a $35 dollar stock. That's a 1.2% premium. The call was 37 so the distance was a little closer which makes greater risk of call but if it calls out it has to go above 37.44 before you miss anything. At 37.44 you have made 9% in 2 weeks! You buy it back and sell another call. That's 1.2% every 2 weeks in that example for just the call premium. If you do that about 15 times a year, that's 18% growth if the stock is perfectly flat with no growth. Also, if you stay on top of it you can get about 20 a year in and you are way over 20%.

I have also done some more volatile stocks where the 2 week premium on a close call is as much a 4%. CAVA is such a stock, but it often calls out. No worry. Calls out on Friday and I just buy it back on Monday and sell another call.

Even if I told you what % growth I averaged last year, you would not believe me so I will let you learn it on your own

Final note on a DOWNSIDE example. I had NVO at 147 and sold 165 for $3.80. A GREAT premium. There was BIG news and it rocketed above 185! I got called out at 165 so I made $20.80 per share but missed the extra 25 a share from the big news day! It was a lot of missed money but I still made 8.7% in 2 weeks. If I had NOT sold the stock the earn would have been around 24% in that same period. It hurts a little to not make that big gain, but those are VERY rare. Over the year I will make a LOT on that stock because the premiums are higher.

[Del]

This is what I do. It is NOT investing advice.


In an IRA I don't care whether or not they get called out because there is no tax consequence. I use mega corp blue chips like PFE BP etc... as an example I just ran a 14 day call on PFE at .44 on a $35 dollar stock. That's a 1.2% premium. The call was 37 so the distance was a little closer which makes greater risk of call but if it calls out it has to go above 37.44 before you miss anything. At 37.44 you have made 9% in 2 weeks! You buy it back and sell another call. That's 1.2% every 2 weeks in that example for just the call premium. If you do that about 15 times a year, that's 18% growth if the stock is perfectly flat with no growth. Also, if you stay on top of it you can get about 20 a year in and you are way over 20%.

I have also done some more volatile stocks where the 2 week premium on a close call is as much a 4%. CAVA is such a stock, but it often calls out. No worry. Calls out on Friday and I just buy it back on Monday and sell another call.

Even if I told you what % growth I averaged last year, you would not believe me so I will let you learn it on your own

Final note on a DOWNSIDE example. I had NVO at 147 and sold 165 for $3.80. A GREAT premium. There was BIG news and it rocketed above 185! I got called out at 165 so I made $20.80 per share but missed the extra 25 a share from the big news day! It was a lot of missed money but I still made 8.7% in 2 weeks. If I had NOT sold the stock the earn would have been around 24% in that same period. It hurts a little to not make that big gain, but those are VERY rare. Over the year I will make a LOT on that stock because the premiums are higher.

The work of Christian charity in this thread is sharing what has worked for us (and what hasn't), and helping others learn what works. So far, it's just been sweetandsour and myself, so we are grateful for your company.

Selling covered calls is definitely a safe way to add cash flow to your IRA, and I'm kicking myself that I haven't thought of this sooner.

This is the first year that I have made consistent profit on my taxable account, so I was reluctant to trade options in my IRA (and then I forgot that great strategy was available).

You aren't going to shock us with stunning returns in your active trading. It is 33 weeks into the year, and I am up 47% in my taxable account. A successful trader can expect 3% to 5% per month, which compounds to 40% to 80% per year. Most people find this unbelievable, but it's just like any learned skill.

Your trade on NVO probably hurt for a while. But you made more money in covered calls over the year than you missed on that one big day.

I have a few questions:

Where do you have your IRA funds, and how do you like their trading platform?
My IRA is at Vanguard, and they don't have much of a platform. My taxable account is with TD Ameritrade, and their Think-or-Swim platform is awesome. I would check trades on the good platform and execute on Vanguard's clunker.

Have you considered doing weekly trades for even more return?
I estimated 10% per year in covered call premium, based on one trade a month. You get 20% per year, based on two trades a month. I can think of a few reasons why you wouldn't, but I wonder what you think.

Do you have a taxable trading account?
What are you doing there?
My bread and butter is selling iron condors on RUT (Russell 2000 index) and SPX (S&P 500).
I hold some sector ETF's on energy and tech, and sell covered calls on those.
This earnings season, I am venturing into volatility crush trades on individual stocks. We are watching how this goes next week.

[sweetandsour]

This is what I do. It is NOT investing advice.


In an IRA I don't care whether or not they get called out because there is no tax consequence. I use mega corp blue chips like PFE BP etc... as an example I just ran a 14 day call on PFE at .44 on a $35 dollar stock. That's a 1.2% premium. The call was 37 so the distance was a little closer which makes greater risk of call but if it calls out it has to go above 37.44 before you miss anything. At 37.44 you have made 9% in 2 weeks! You buy it back and sell another call. That's 1.2% every 2 weeks in that example for just the call premium. If you do that about 15 times a year, that's 18% growth if the stock is perfectly flat with no growth. Also, if you stay on top of it you can get about 20 a year in and you are way over 20%.

I have also done some more volatile stocks where the 2 week premium on a close call is as much a 4%. CAVA is such a stock, but it often calls out. No worry. Calls out on Friday and I just buy it back on Monday and sell another call.

Even if I told you what % growth I averaged last year, you would not believe me so I will let you learn it on your own

Final note on a DOWNSIDE example. I had NVO at 147 and sold 165 for $3.80. A GREAT premium. There was BIG news and it rocketed above 185! I got called out at 165 so I made $20.80 per share but missed the extra 25 a share from the big news day! It was a lot of missed money but I still made 8.7% in 2 weeks. If I had NOT sold the stock the earn would have been around 24% in that same period. It hurts a little to not make that big gain, but those are VERY rare. Over the year I will make a LOT on that stock because the premiums are higher.

Thank you very much for your post! I'm very interested in the idea of covered calls within an IRA, and plan to check into that. Meanwhile, I've studied options just a little, for possible use with my so-called play account with Fidelity, which is very small, but so far I've only done very short term investing, and selling calls would tie up my account. I can't say I'm a day trader since I don't have enough in my account, but I can still do the maximum 3 or 4 trades per week and not get my hand slapped. I have seller's remorse constantly but stick with my game plan. I've bought and sold NVDA, Amazon, Apple, several oil stocks and others, several times, don't mind volatility, and prefer to be all in cash at the end of each day.

Re your post, I'm still doing the math. You buy 100 shares for $3500, and sell a call for $44. If the stock goes to $37.44, and the call buyer buys your stock, then you make $3744. So you earn $288 on a $3500 investment, 8.2%, in whatever time period is specified, eg 2 weeks. If the stock price stays the same or drops, then you keep the $44, and possibly use it buy the option back, in order to be able to sell the stock and limit losses?

[MrPiper]

This is what I do. It is NOT investing advice.


In an IRA I don't care whether or not they get called out because there is no tax consequence. I use mega corp blue chips like PFE BP etc... as an example I just ran a 14 day call on PFE at .44 on a $35 dollar stock. That's a 1.2% premium. The call was 37 so the distance was a little closer which makes greater risk of call but if it calls out it has to go above 37.44 before you miss anything. At 37.44 you have made 9% in 2 weeks! You buy it back and sell another call. That's 1.2% every 2 weeks in that example for just the call premium. If you do that about 15 times a year, that's 18% growth if the stock is perfectly flat with no growth. Also, if you stay on top of it you can get about 20 a year in and you are way over 20%.

I have also done some more volatile stocks where the 2 week premium on a close call is as much a 4%. CAVA is such a stock, but it often calls out. No worry. Calls out on Friday and I just buy it back on Monday and sell another call.

Even if I told you what % growth I averaged last year, you would not believe me so I will let you learn it on your own

Final note on a DOWNSIDE example. I had NVO at 147 and sold 165 for $3.80. A GREAT premium. There was BIG news and it rocketed above 185! I got called out at 165 so I made $20.80 per share but missed the extra 25 a share from the big news day! It was a lot of missed money but I still made 8.7% in 2 weeks. If I had NOT sold the stock the earn would have been around 24% in that same period. It hurts a little to not make that big gain, but those are VERY rare. Over the year I will make a LOT on that stock because the premiums are higher.

Thank you very much for your post! I'm very interested in the idea of covered calls within an IRA, and plan to check into that. Meanwhile, I've studied options just a little, for possible use with my so-called play account with Fidelity, which is very small, but so far I've only done very short term investing, and selling calls would tie up my account. I can't say I'm a day trader since I don't have enough in my account, but I can still do the maximum 3 or 4 trades per week and not get my hand slapped. I have seller's remorse constantly but stick with my game plan. I've bought and sold NVDA, Amazon, Apple, several oil stocks and others, several times, don't mind volatility, and prefer to be all in cash at the end of each day.

Re your post, I'm still doing the math. You buy 100 shares for $3500, and sell a call for $44. If the stock goes to $37.44, and the call buyer buys your stock, then you make $3744. So you earn $288 on a $3500 investment, 8.2%, in whatever time period is specified, eg 2 weeks. If the stock price stays the same or drops, then you keep the $44, and possibly use it buy the option back, in order to be able to sell the stock and limit losses?

You basically have it right. A stock that is $35 with a 2 week covered call option at $37 and a premium of .44 per share is a 1.2% fee you receive for selling the option. You have to sell in multiples of 100 shares so 1 covered call is on 100 shares at $35 so on a $3500 investment you would get $44.00 or 1.2% on your $3500. IF on the day the call expires, the price of the stock is at or above $37 a share, the shares automatically sell at that market price at or above $37.00. IF the stock sells you get $37.00 a share even if the stock has gone to $50000 a share doesn't matter. Your option is a promise to sell at $37.00 so you make $2.00 per share from your cost of $35 to $37 + the original .44 per share so you make a total of $2.44 for every $35.00 share you started with and thus the 8.2% growth in 2 weeks.

IF the stock does call out, you can buy it back with the proceeds and sell another call, or buy a different stock and sell a call on that or basically whatever you want to do with the money.

In an IRA, there is no tax consequence on any of this. In a brokerage account that is not tax sheltered, you would pay short term capital gains on the .44 call premium per share AND the $2.00 per share growth. Still, death and taxes are certain. I don't worry about this in either my brokerage account OR my IRA account. I just trade to make money. I hope this clears up what I do a little. I am NOT that bright, this is a fairly straight forward concept. If I can do it, a smart person can do it and probably do it a lot better. Maybe you and Del and I need to do a Zoom call and talk it out.

[sweetandsour]

This is what I do. It is NOT investing advice.


In an IRA I don't care whether or not they get called out because there is no tax consequence. I use mega corp blue chips like PFE BP etc... as an example I just ran a 14 day call on PFE at .44 on a $35 dollar stock. That's a 1.2% premium. The call was 37 so the distance was a little closer which makes greater risk of call but if it calls out it has to go above 37.44 before you miss anything. At 37.44 you have made 9% in 2 weeks! You buy it back and sell another call. That's 1.2% every 2 weeks in that example for just the call premium. If you do that about 15 times a year, that's 18% growth if the stock is perfectly flat with no growth. Also, if you stay on top of it you can get about 20 a year in and you are way over 20%.

I have also done some more volatile stocks where the 2 week premium on a close call is as much a 4%. CAVA is such a stock, but it often calls out. No worry. Calls out on Friday and I just buy it back on Monday and sell another call.

Even if I told you what % growth I averaged last year, you would not believe me so I will let you learn it on your own

Final note on a DOWNSIDE example. I had NVO at 147 and sold 165 for $3.80. A GREAT premium. There was BIG news and it rocketed above 185! I got called out at 165 so I made $20.80 per share but missed the extra 25 a share from the big news day! It was a lot of missed money but I still made 8.7% in 2 weeks. If I had NOT sold the stock the earn would have been around 24% in that same period. It hurts a little to not make that big gain, but those are VERY rare. Over the year I will make a LOT on that stock because the premiums are higher.

Thank you very much for your post! I'm very interested in the idea of covered calls within an IRA, and plan to check into that. Meanwhile, I've studied options just a little, for possible use with my so-called play account with Fidelity, which is very small, but so far I've only done very short term investing, and selling calls would tie up my account. I can't say I'm a day trader since I don't have enough in my account, but I can still do the maximum 3 or 4 trades per week and not get my hand slapped. I have seller's remorse constantly but stick with my game plan. I've bought and sold NVDA, Amazon, Apple, several oil stocks and others, several times, don't mind volatility, and prefer to be all in cash at the end of each day.

Re your post, I'm still doing the math. You buy 100 shares for $3500, and sell a call for $44. If the stock goes to $37.44, and the call buyer buys your stock, then you make $3744. So you earn $288 on a $3500 investment, 8.2%, in whatever time period is specified, eg 2 weeks. If the stock price stays the same or drops, then you keep the $44, and possibly use it buy the option back, in order to be able to sell the stock and limit losses?

You basically have it right. A stock that is $35 with a 2 week covered call option at $37 and a premium of .44 per share is a 1.2% fee you receive for selling the option. You have to sell in multiples of 100 shares so 1 covered call is on 100 shares at $35 so on a $3500 investment you would get $44.00 or 1.2% on your $3500. IF on the day the call expires, the price of the stock is at or above $37 a share, the shares automatically sell at that market price at or above $37.00. IF the stock sells you get $37.00 a share even if the stock has gone to $50000 a share doesn't matter. Your option is a promise to sell at $37.00 so you make $2.00 per share from your cost of $35 to $37 + the original .44 per share so you make a total of $2.44 for every $35.00 share you started with and thus the 8.2% growth in 2 weeks.

IF the stock does call out, you can buy it back with the proceeds and sell another call, or buy a different stock and sell a call on that or basically whatever you want to do with the money.

In an IRA, there is no tax consequence on any of this. In a brokerage account that is not tax sheltered, you would pay short term capital gains on the .44 call premium per share AND the $2.00 per share growth. Still, death and taxes are certain. I don't worry about this in either my brokerage account OR my IRA account. I just trade to make money. I hope this clears up what I do a little. I am NOT that bright, this is a fairly straight forward concept. If I can do it, a smart person can do it and probably do it a lot better. Maybe you and Del and I need to do a Zoom call and talk it out.

I'm up for a zoom call, if we can schedule it around my comings and goings sometime. Afternoons generally are better for me.

[Del]

Maybe you and Del and I need to do a Zoom call and talk it out.

A phone conference would be great, even if it's just to smoke and shoot the breeze!

Is this correct? -- I believe that in addition to selling covered calls, a guy can also buy protective puts within an IRA. So instead of relying on stop-loss sale orders (and the risk of getting whip-sawed), a guy can protect his principal with a collar.

(Forgive me if you already know this: a "collar" happens when you sell a covered call and buy a protective put. This is a great strategy when one fears a strong down-turn: Use the premium from the call to purchase the put, and no more fear of the bottom dropping out. On the other hand, no risk if price drops for a span and then recovers.

=================

I'd like to know what you think about sector ETF's instead of individual stocks. I don't have much skill at picking individual stocks. I wouldn't mind learning.

[Del]

You basically have it right. A stock that is $35 with a 2 week covered call option at $37 and a premium of .44 per share is a 1.2% fee you receive for selling the option. You have to sell in multiples of 100 shares so 1 covered call is on 100 shares at $35 so on a $3500 investment you would get $44.00 or 1.2% on your $3500. IF on the day the call expires, the price of the stock is at or above $37 a share, the shares automatically sell at that market price at or above $37.00. IF the stock sells you get $37.00 a share even if the stock has gone to $50000 a share doesn't matter. Your option is a promise to sell at $37.00 so you make $2.00 per share from your cost of $35 to $37 + the original .44 per share so you make a total of $2.44 for every $35.00 share you started with and thus the 8.2% growth in 2 weeks.

By my reckoning, if you are getting about 1% premium for two weeks expiration, then you are selling options with a delta of 0.3 to 0.35 -- which means you are likely getting called out roughly every third trade or so. Has this been your experience?

Or do you like to write your calls more "dynamically" -- waiting for the market to test resistance at a relative high before you place your trades?

Just curious to learn more about your trading style.

Do you know what I mean by "delta"? You clearly have a successful trading style; just wondering if you also speak in trading jargon.
=========================================

I just submitted applications to Vanguard to get permissions for options on my IRA brokerage accounts. So there! Thanks for the tremendous tip.

[sweetandsour]

https://www.marketwatch.com/investing/s ... quote_news

J.P.M. cut the TGT price target from 144, down to $115 today.

Whoa! They moved the target on TARGET (I just love saying that) from $13 UP to $16 DOWN! That's brutal!

Do they have some intel on TGT earnings, announcing on Tuesday? I wonder....

I had a great trading day. I wanted to catch an uptick on RUT (Russell 2000 midcaps) and SPX. I set my positions around 9:00 am, which happened to be the daily max on both indexes, before the plummet started. My condors are well-positioned for the next week or two. I have a great shot of getting my wing over the goal of $80K.

I could face some trouble if SPX takes a serious dive tomorrow, as my old condor on SPX expires. I have decided to set all of my condors to expire on Wednesdays, and just avoid Fridays entirely. Friday afternoon is too crazy for me.

Watched TGT a little today, it's earnings report day. It bottomed at ~125 and peaked at ~133, before settling at ~128. Reportedly they've removed the pride-related items, in order to "protect employees", according to the CEO. Whatever.

[Del]

Watched TGT a little today, it's earnings report day. It bottomed at ~125 and peaked at ~133, before settling at ~128. Reportedly they've removed the pride-related items, in order to "protect employees", according to the CEO. Whatever.

Target's online sales are down over 10%. This is not industry-wide; Amazon's sales are not down.

Shoppers aren't even looking at Target's website anymore. Shoppers who probably don't live within an easy drive of a Target store. Which means that they aren't going to be comforted by the end of June and the removal of the offensive displays.

Like Bud Light, Target has permanently alienated a significant chunk of their customer base.

In store, sales are down by over 5%. Target blames Bidenomics; shoppers are looking for cheaper options. They claim that foot traffic improved in July (they fail to mention that this is right after the offensive displays were removed).

We'll see what Walmart reports tomorrow morning....

Right wing news blogs are crowing over the alienation of Target customers. I don't quite trust news sources that are so happy about their reporting. So I checked CNBC Financial News, to see how they spin it.
Target slashes full-year forecast as retailer struggles to win over thrifty shoppers

Some insightful quotes:

CEO Brian Cornell said Target’s sales and store traffic improved in July. Yet he said the company is wary about trends in the second half of the year including rising interest rates, the return of student loan payments this fall and still elevated prices of everyday items.

“As we look at the consumer landscape today, we recognize the consumer is still challenged by the levels of inflation that they’re seeing in food and beverage and household essentials,” he said on a call with reporters. “So that’s absorbing a much bigger portion of their budget.”

As I said, they are blaming Bidenomics. I can't argue with this. But notice the sly slide of " sales and store traffic improved in July."

Sales softened in the second half of May and into June before recovering in July, Cornell said.

Hmmm.... I wonder why?

Deep in the article, Target CEO has to address the elephant:

And Target faced backlash in late May over its collection of merchandise celebrating Pride month, including some items it later pulled after threats to employees. The decision to remove certain items sparked more criticism.

Cornell said “negative reaction” to Target’s Pride collection had a material impact on sales. But he defended the company’s response and said after Target removed some items in June out of concern for employee and customer safety, it “saw things normalize.” He said it will continue to have a collection for Pride month and other heritage months.

Media is still blaming the "threats to store employees," but it's funny how no stories of actual threats have come to light. Most likely, some customers complained about the displays. I know of one event in which a customer destroyed the large "PRIDE" sign. That's about as violent as it got.

The article goes on, sandwiching the boycott blurb with a long discussion of how well Target is slashing inventory and on track to continued profits.

The stock market was not fooled after the first 30 minutes of trading today.
==============================

I made $644 on Target's volatility crush today. Can't wait until next quarter.

[sweetandsour]

Watched TGT a little today, it's earnings report day. It bottomed at ~125 and peaked at ~133, before settling at ~128. Reportedly they've removed the pride-related items, in order to "protect employees", according to the CEO. Whatever.

Target's online sales are down over 10%. This is not industry-wide; Amazon's sales are not down.

Shoppers aren't even looking at Target's website anymore. Shoppers who probably don't live within an easy drive of a Target store. Which means that they aren't going to be comforted by the end of June and the removal of the offensive displays.

Like Bud Light, Target has permanently alienated a significant chunk of their customer base.

In store, sales are down by over 5%. Target blames Bidenomics; shoppers are looking for cheaper options. They claim that foot traffic improved in July (they fail to mention that this is right after the offensive displays were removed).

We'll see what Walmart reports tomorrow morning....

Right wing news blogs are crowing over the alienation of Target customers. I don't quite trust news sources that are so happy about their reporting. So I checked CNBC Financial News, to see how they spin it.
Target slashes full-year forecast as retailer struggles to win over thrifty shoppers

Some insightful quotes:

CEO Brian Cornell said Target’s sales and store traffic improved in July. Yet he said the company is wary about trends in the second half of the year including rising interest rates, the return of student loan payments this fall and still elevated prices of everyday items.

“As we look at the consumer landscape today, we recognize the consumer is still challenged by the levels of inflation that they’re seeing in food and beverage and household essentials,” he said on a call with reporters. “So that’s absorbing a much bigger portion of their budget.”

As I said, they are blaming Bidenomics. I can't argue with this. But notice the sly slide of " sales and store traffic improved in July."

Sales softened in the second half of May and into June before recovering in July, Cornell said.

Hmmm.... I wonder why?

Deep in the article, Target CEO has to address the elephant:

And Target faced backlash in late May over its collection of merchandise celebrating Pride month, including some items it later pulled after threats to employees. The decision to remove certain items sparked more criticism.

Cornell said “negative reaction” to Target’s Pride collection had a material impact on sales. But he defended the company’s response and said after Target removed some items in June out of concern for employee and customer safety, it “saw things normalize.” He said it will continue to have a collection for Pride month and other heritage months.

Media is still blaming the "threats to store employees," but it's funny how no stories of actual threats have come to light. Most likely, some customers complained about the displays. I know of one event in which a customer destroyed the large "PRIDE" sign. That's about as violent as it got.

The article goes on, sandwiching the boycott blurb with a long discussion of how well Target is slashing inventory and on track to continued profits.

The stock market was not fooled after the first 30 minutes of trading today.
==============================

I made $644 on Target's volatility crush today. Can't wait until next quarter.

I should have bought a few shares of Walmart a month ago. BTW, where's MrPiper? He's supposed to tell me more about covered calls.