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George Acs

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    Whether the sale of calls or puts the result is the same. You are liable for short term capital gains.

    My belief is that anything that results in a net gain after taxes is a worthwhile pursuit.

    Insofar as the size of the account goes, as it may be related to the amount of income generated, you could conceivably move yourself up to a higher tax bracket, which , therefore would impact all other earnings at the margins.

    That's certainly a consideration and can easily be calculated, but the remedy to that is to already be at the highest tax bracket.
    Aug 6 06:04 AM | Likes Like |Link to Comment
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    Depending upon your brokerage, you can still sell cash secured puts through a tax deferred account. I do so regularly.

    In general, I like to use accounts differently, but those uses aren't exclusive

    For example, I prefer to sell puts using a margin account. Doing so doesn't incur interest expense, unless assigned and you have to take ownership of shares. I otherwise don't want to use margin in the traditional manner.

    The margin account is also helpful in the case of dividend related trades that may be at higher risk for early assignment and that might otherwise put someone at risk for a free riding violation.

    I like to use a taxable account for more speculative positions in order to get tax benefit if needing to take a loss.

    Tax deferred accounts are especially good for dividend related trades and certainly shields one from short term capital gains tax liability.
    Aug 6 05:56 AM | Likes Like |Link to Comment
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    The volatility in COH will pick up quite a bit if another couple of days of gains can be made. If so, then it becomes a potential DOH trade, a week at a time.

    I don't know if it will qualify for "comeback of the year" but it will make it back now that all of the figurative baggage has been dumped.
    Aug 5 06:45 PM | Likes Like |Link to Comment
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    Closing at $35.80 today and with 3 days still to go on that expiration there's probably not much reason to rush into a rollover until its certain that otherwise assignment is going to happen.

    As far as picking a rollover date and the dividend go, if you do have to rollover the best way is to play it a week at a time, always trying to stay ahead of assignment. When getting to the week of the ex-dividend date, when it is finally announced, you can opt for using an expanded weekly option and going with an out of the money strike.

    Then, unless shares are deeply in the money on the ex-dividend date, you are less likely to face early assignment and loss of the dividend.

    If you held FDO, you may remember that we did that when news first came out of Icahn's position and shares surged. We bought back those now deep in the money calls two days before the ex-div date and rolled over to a contract expiring a few weeks later in order to have a better chance of keeping the dividend, which ended up being the case.

    In that case it was a little easier because the week chosen to rollover to happened to be the one in which earnings were going to be announced so option holders were more interested in potential leveraging from earnings as opposed to relative pennies from dividends.
    Aug 5 06:41 PM | Likes Like |Link to Comment
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    We went from a Golden Retriever to a mini-dachshund. The grass hasn't stopped thanking me. The only problem is now I can't blame the various lawn droppings on the dog.
    Aug 5 12:31 PM | Likes Like |Link to Comment
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    So here's the thing about being able to touch those IRA's, presumably when you turn 59 1/2.

    For years I had counted down until I would reach that point. I just assumed that I would start withdrawals, but I really had no interest in paying the 10% penalty.

    But, the really nice thing has been that creating the income stream through option premiums and more dividends, while trading through both tax deferred and taxable accounts, I've been able to not tap into the tax deferred accounts.

    That anniversary passed nearly a year ago and I haven't "worked" in about 5 years. What has changed is that at one time the premiums went toward reducing the cost basis of positions or plowed back into new positions and now it provides income to replace employment.

    The trading has become the job and I pay myself from a share opf the income produced, not really caring too much about what the daily portfolio value happens to be at any moment in time, caring much more about its ability to sustain income flow.

    The downside, of course, is that the sedentary life style sitting in front of a computer screen and ticker is likely going to reduce my life expectancy, but it has been fun.
    Aug 5 07:45 AM | Likes Like |Link to Comment
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    Maybe I should consider re-reading the articles before I press the "publish" button.
    Aug 5 07:34 AM | Likes Like |Link to Comment
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    Deep in the money calls are especially appealing when the volatility is considerably higher than currently and can offer especially good returns with a relatively high degree of safety, as compared to the rest of the market which would generally be on a downward sloping path.

    If the VIX can return to a 25 or higher level and stay there for a few months there may be lots of opportunity to use the deep in the money calls for new purchases and the 5-10% OTM calls for existing positions, particularly those that have fallen below their purchase price.
    Aug 4 02:27 PM | Likes Like |Link to Comment
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    I usually wait to get at least 6 months of trading and 2 earnings reports before making trades on most stocks.

    KING has a big hurdle coming up with a successor to its huge hit, although they have a pipeline that is supposedly pretty deep. You just never know what will become wildly popular and generate real revenues. I just look to ZNGA and see how quickly the promise can fade, although the early stage markets and the strategies are different between those two companies.
    Aug 4 12:29 PM | Likes Like |Link to Comment
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    Covered options can be suited to fit your tolerances for risk, reward and time availability to manage your positions.

    SOmetimes those longer term option contracts are nice to use, especially if you don't have too much time to watch things. But beyond that they can be great for positions that already offer nice dividends. You can easily boost your yield even while using out of the money calls. Just sit back and relax.

    As far as early assignment on longer term positions goes, it's not too likely unless you're really deep in the money, maybe an ex-dividend date is approaching and/or there's very little profit to be made by trading the options any longer, which is especially the case with deep in the money and low volatility.
    Aug 4 10:06 AM | Likes Like |Link to Comment
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    While I definitely believe we lose our ability as we age, the growing knowledge base dwarfs our abilities to keep up, regardless of age. Fortunately, there are tools to supplement our limited capacity, as long as we know how to use them for things other than surfing Zillow
    Aug 4 08:10 AM | Likes Like |Link to Comment
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    It's always good to know what's going on. When I used a broker I never micromanaged him and with a discretionary trading account really didn't have to speak very often, but he was always amazed that I knew what was going on from day to day. Back before the internet the best thing in the world was Quicken. I would update the stock portfolio prices a few times an hour, even though I did nothing with the information other than to file it away.
    Aug 3 08:09 PM | Likes Like |Link to Comment
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    As in the cost of a six pack? You could have gone with St. Pauli Girl or Schmidts and saved the Bud for special occasions
    Aug 3 08:06 PM | Likes Like |Link to Comment
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    Thanks, but "putting up" is hardly the case.

    The feedback, public and private is always good to get, especially during periods of market weakness. In dental school our class size was only 17 so we used to have regular meetings with our Dean. He always told us to start off every meeting by telling him what was good. That way he was more likely to listen to the critiques

    The interesting thing about "fine tuning" is that is what is most likely to be in need of change as the markets change in character or even simply stutter step. Keeping fairly strict adherence to the foundation of whatever kind of approach anyone uses is probably the first key to success. Too much wavering and laxity in rigor is what I think can make the difference between acceptable and unacceptable outcomes for any reasonable strategy.
    Aug 3 06:42 PM | Likes Like |Link to Comment
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    So in your world trickle down can be quite dangerous.
    Aug 3 06:23 PM | 1 Like Like |Link to Comment