Originally Posted by
JamesBond
Yesterday I sold some puts that close this week, (in two days) and some that sell next Friday. I also have some longer term stuff (Feb 19). I do a lot of trading though. In 2020 I will wind up with somewhere near 1700 trades. I think I said in another post, but I TRY to make an average of $75/week for every $20,000 that I am leveraging, whether or not it is thru puts or calls. Some days you are the windshield, some days you are the bug. I am long and underwater in a position right now, but I will keep selling calls on it until it returns. If the pain goes on long enough, I will punt and move on. That's the art in all of this... Hope this helps.
-How much are you leveraging your $20,000?
-How do much time does it take reporting 1,700 trades on your tax return?
$75 per week comes out to $3,900 per year, which is a respectable 19.5%. A few days of being the windshield vs the bug can take that down to the mid teens very quickly. An 80% success rate at the often touted 2% monthly returns is 19.2%. You seem to be in the ballpark with the research I've done. I'm still uncertain about the time commitment, bookkeeping requirements and the tax liability of trading outside of a retirement account.
Originally Posted by
mispoken
As for writing covered calls, I NEVER write calls against shares I want to hold long term, eventually they may get called away and I don’t want to trade a few hundred bucks in premium for 10000% gains in the long run.
The nice thing about tastyworks, is that when you select a strike, they give you a POP and P50, that is probability of profit (making at least one penny) and probability of making 50% profit. This strike is usually called a “30 delta”, but don’t let that confuse you; what you want to do is pick a strike that shows up with a 70% POP. This is the tastytrade way, small trades often aiming for 70% POP.
In the past, I've just rolled the covered calls out to the next expiration cycle. You could also buy back the shares after exercise, which creates a CG problem in a taxable account. An exercised ITM option isn't the end of the world. I recently sold FEB 725 CC on a portion of my TSLA position. I'm planning on rolling out to March in about a month.
Thanks for all the TW pointers. There are lots of similarities between thinkorswim and tastyworks. I just figured out that Tom Sosnoff is the connection between the two.