Originally Posted by
Seneca Pilot
You are correct. I didn't even think about options on equities. I only trade options on indices because I like my money. The indices are far less volatile than individual stocks and are more ranging in nature. Even when trending as they are now the indices tend to do it in a controlled way. The 1256 tax treatment is key to keeping gains if you are successful. It can be as much as a 15-20% savings.
I love iron condors on SPX.
I've been playing with ICs on SPY, but see the value in changing to SPX. I'm surprised Tastytrade uses SPY vs SPX options in the videos I've seen. Perhaps it's geared toward smaller traders that can't tie up the capital required to cover SPX. Larger bid/ask spreads on SPX could be another reason.
I'm trading a paper money account right now to get comfortable with the more complex strategy mechanics. Tomorrow's paper trades will be an SPX IC and maybe a short straddle/strangle on BRK/B.
The only live trading I've done so far is CC on TSLA at 725 and 750. The premium is crazy high and the recent price rise is likely a little bump in price from the window dressing portfolio buyers. If I end up ITM, I'll roll to Mar. I should have my TSLA basis down to 0 by the spring.
Thoughts on strangles vs IC on SPX? It looks like a wider profit range at the same strikes and you could manage losses vs spending $$ on the long side of an IC.
Besides SPX, what other indices do you trade? Is there a bond index similar to the TLT ETF?