Suspended losses are cumulative, year by year, and don't show up anywhere on the K-1.
You need to compute your actual loss, if any, each year and carry them forward.
To compute your annual loss, start with Line 1, then add/subtract all the other lines.
Or, take the easy way out and just look to Line L "Current Years Increase/Decrease". If negative, that should be your loss and be close to the calculation from all the other lines.
You line L loss is then reported on schedule E, and should be cumulative there.
I'm not a CPA, but I believe that's how it's done.
I did, however bring this up in a preceding article (http://seekingalpha.co...) as well as recommend keeping track. The MLPS, for some unexplained reason, do not keep track.
In what has been dubbed as largely a symbolic vote, the House of Representatives did what was expected and opted to repeal the health-care overhaul law, but it's is likely be dead in Congress’s lower chamber. The vote was 229 to 195 to repeal the measure, with two Democrats voting along with the Republican majority: Mike McIntyre of North Carolina and Jim Matheson of Utah. Sidenote: This is the 37th attempt to repeal the law since it was passed in March 2010. [View news story]
In what has been dubbed as largely a symbolic vote, the House of Representatives did what was expected and opted to repeal the health-care overhaul law, but it's is likely be dead in Congress’s lower chamber. The vote was 229 to 195 to repeal the measure, with two Democrats voting along with the Republican majority: Mike McIntyre of North Carolina and Jim Matheson of Utah. Sidenote: This is the 37th attempt to repeal the law since it was passed in March 2010. [View news story]
Hi Tack,
Actually, many consider the Senate the lower chamber and the House the lowest chamber.
First, calendar spreads work best with low beta stocks. When used for hi beta (such as AAPL), the short put must be set DITM and rolled and held until the strike is reached, then close out and move on. It would be classified more as a trading strategy than an investing strategy.
The portfolio strategy anticipates that the short will be rolled at expiry. It is a disciplined, continuous investing strategy. If the market moves down, you will show losses, just as you would if you had invested in a traditional manner. However, these losses are temporary as the continuous selling of the short puts will recover more extrinsic. The most that is ever at risk is the cost of the long put minus the extrinsic received.
The risk is the see-saw market and that requires keeping the short puts as DITM as you can. Even, at times, sacrificing extrinsic.
Selling puts can be a stand alone strategy. Or, it can be combined with portfolio protection to protect against risk.
It all depends upon what you're trying to accomplish and your risk tolerance.
The problem most have with a long only position is the tendency to over-invest in a rising market and under-invest in a down market.
The objective of portfolio protection is to allow the investor to stay invested at all times.
A second benefit is the ability to leverage. For instance, with a $200k in cash, one should keep a reasonable allocation to cash or bonds (30%-65%) depending upon time-frame). Utilizing portfolio protection one can allocate the whole $200k to equities, as the long put provides the balance.
My personal strategy is to sell puts and cover it with portfolio protection of far-dated puts. It breaks down to a simple diagonal calendar spread.
I use weekly puts instead of monthly. It requires more effort, but you can use monthly.
Here's how I would do it with a$200k portfolio.
1) Buy far-dated June '14 puts with a strike of $160 at a cost of $11/option.
2) Target recovery = $11 divided by 50 weeks = 22cents/week. Monthly = $11 divided by 13= 85cents/month
3) Sell puts as high ITM as possible, while still earning the extrinsic target recovery.
In this case weekly = $165 strike credits $1.80 which is 23cents extrinsic=right on the money.
Using monthly puts, June 22nd $170 strike credits $7.56, which is 99 cents ITM.
This is what I recommend for starting out. When you gain some experience and confidence you can vary the strikes up/down depending upon your view of the market. If I'm "skittish" I'll move some (but never all) of the puts to ATM. If we're talking about 15 puts, I might move 10 to ATM, but never more.
You can also mix/match weeklies with monthlies to see which you prefer. You could sell 5 weekly and 10 monthly.
One additional item.... when you use this strategy your interim results will resemble a portfolio value approximately 1/2 of the exposure....that is 15 puts= $250k exposure, interim results mimic $125k portfolio. . That is because the far dated protective put is sort of "reverse leverage".
So, if you really wanted to invest all of the $200k, then you need to "lever-up" the number of puts to neutralize the "reverse leverage". I'd probably go with 20-25 puts at both ends. Cost recovery, etc, remains the same. Then your interim results will mimic a $160k-$200k portfolio.
This may seem aggressive, but it really isn't. Remember the portfolio is protected and your risk is limited. Be sure to read my article on see-saw markets, because that's where the real risk of loss comes in.
I really shouldn't say risk of loss. Instead "market underperformance" in a rapidly rising market is the true downside.
Playing 2012 With SPY Options - 'What Me Worry?' [View article]
Hi Tajas,
1) The market can fluctuate between AM and PM so there is no "perfect answer". If the expiring put is ITM or ATM, there is reasonable time decay between AM and PM. Since I'll hold the expiring till PM, to gather that decay, I'll roll the new one at the same time---in the PM.
2) I do exactly as you do, provided the expiring is reasonably OTM. Since the market is up 60% of the time, probability favors having a long position and an OTM expiring brings little to the game.
3) If the expiring is well OTM, I do as you do. If it is ATM or ITM, then I hold till Friday PM.
Other considerations ---- if the market moves against you on Mon-Wed, just hold tight. I've learned the hard way that Thursday is the day to make adjustments, not before and often not till Friday.
Other considerations --- if the market drops considerably during the week and vix rises, I will, sometimes, go two weeks out to take advantage of the increased volatility. Take a look on a case by case and decide if it works.
I think your article makes some erroneous conclusions.
First, you do not seem to account for electricity that is ZERO C02 emission generated by solar, wind or water turbines. You allocate 100% emission to 67% of the output.
What about the "green" Tesla owner that charges their Tesla from the Solar cells on their California home? You ignore this completely.
You reduce Tesla mileage claims to reflect actual, but you stick with reported for ICE.
Also, one must consider that Commercial power plants are maintained for optimum efficiency. Whereas most drivers of ICE cars do not do so (tune-ups, air filters, etc.). So there is an inherent efficiency of a grid delivery system over individuals. It is more efficient to "clean and maintain" a power plant then to do so with millions of ICE cars.
All in all, I think you are trying to make a comparison in a situation that has too many variables. To ignore some, as you have done, does no one any service.
MLPs - A Reality Check ? [View article]
Some of the lines are pluses, not minus and some don't count.. You have to look at each definition in the instructions for what it is...
For instance line 17d is income while 17e is expense. I don't think 19a is factored in and 20Y could be a plus or minus.
Also, is your "capital loss" = Line L "Current Year increase/decrease" ?
I don't understand your reference to 13T.
MLPs - A Reality Check ? [View article]
Suspended losses are cumulative, year by year, and don't show up anywhere on the K-1.
You need to compute your actual loss, if any, each year and carry them forward.
To compute your annual loss, start with Line 1, then add/subtract all the other lines.
Or, take the easy way out and just look to Line L "Current Years Increase/Decrease". If negative, that should be your loss and be close to the calculation from all the other lines.
You line L loss is then reported on schedule E, and should be cumulative there.
I'm not a CPA, but I believe that's how it's done.
MLPs - A Reality Check ? [View article]
You are correct.
I did, however bring this up in a preceding article (http://seekingalpha.co...) as well as recommend keeping track. The MLPS, for some unexplained reason, do not keep track.
In what has been dubbed as largely a symbolic vote, the House of Representatives did what was expected and opted to repeal the health-care overhaul law, but it's is likely be dead in Congress’s lower chamber. The vote was 229 to 195 to repeal the measure, with two Democrats voting along with the Republican majority: Mike McIntyre of North Carolina and Jim Matheson of Utah. Sidenote: This is the 37th attempt to repeal the law since it was passed in March 2010. [View news story]
Sense of humor missing here !!!!
In what has been dubbed as largely a symbolic vote, the House of Representatives did what was expected and opted to repeal the health-care overhaul law, but it's is likely be dead in Congress’s lower chamber. The vote was 229 to 195 to repeal the measure, with two Democrats voting along with the Republican majority: Mike McIntyre of North Carolina and Jim Matheson of Utah. Sidenote: This is the 37th attempt to repeal the law since it was passed in March 2010. [View news story]
Actually, many consider the Senate the lower chamber and the House the lowest chamber.
Selling Puts - Investing Made Easy [View article]
Yes. You've got it.
Selling Puts - Investing Made Easy [View article]
First, calendar spreads work best with low beta stocks. When used for hi beta (such as AAPL), the short put must be set DITM and rolled and held until the strike is reached, then close out and move on. It would be classified more as a trading strategy than an investing strategy.
The portfolio strategy anticipates that the short will be rolled at expiry. It is a disciplined, continuous investing strategy. If the market moves down, you will show losses, just as you would if you had invested in a traditional manner. However, these losses are temporary as the continuous selling of the short puts will recover more extrinsic. The most that is ever at risk is the cost of the long put minus the extrinsic received.
The risk is the see-saw market and that requires keeping the short puts as DITM as you can. Even, at times, sacrificing extrinsic.
Selling Puts - Investing Made Easy [View article]
Selling puts can be a stand alone strategy. Or, it can be combined with portfolio protection to protect against risk.
It all depends upon what you're trying to accomplish and your risk tolerance.
The problem most have with a long only position is the tendency to over-invest in a rising market and under-invest in a down market.
The objective of portfolio protection is to allow the investor to stay invested at all times.
A second benefit is the ability to leverage. For instance, with a $200k in cash, one should keep a reasonable allocation to cash or bonds (30%-65%) depending upon time-frame). Utilizing portfolio protection one can allocate the whole $200k to equities, as the long put provides the
balance.
Selling Puts - Investing Made Easy [View article]
It's never too late to come to my party.
My personal strategy is to sell puts and cover it with portfolio protection of far-dated puts. It breaks down to a simple diagonal calendar spread.
I use weekly puts instead of monthly. It requires more effort, but you can use monthly.
Here's how I would do it with a$200k portfolio.
1) Buy far-dated June '14 puts with a strike of $160 at a cost of $11/option.
2) Target recovery = $11 divided by 50 weeks = 22cents/week. Monthly = $11 divided by 13= 85cents/month
3) Sell puts as high ITM as possible, while still earning the extrinsic target recovery.
In this case weekly = $165 strike credits $1.80 which is 23cents extrinsic=right on the money.
Using monthly puts, June 22nd $170 strike credits $7.56, which is 99 cents ITM.
This is what I recommend for starting out. When you gain some experience and confidence you can vary the strikes up/down depending upon your view of the market. If I'm "skittish" I'll move some (but never all) of the puts to ATM. If we're talking about 15 puts, I might move 10 to ATM, but never more.
You can also mix/match weeklies with monthlies to see which you prefer. You could sell 5 weekly and 10 monthly.
One additional item.... when you use this strategy your interim results will resemble a portfolio value approximately 1/2 of the exposure....that is 15 puts= $250k exposure, interim results mimic $125k portfolio. . That is because the far dated protective put is sort of "reverse leverage".
So, if you really wanted to invest all of the $200k, then you need to "lever-up" the number of puts to neutralize the "reverse leverage". I'd probably go with 20-25 puts at both ends. Cost recovery, etc, remains the same. Then your interim results will mimic a $160k-$200k portfolio.
This may seem aggressive, but it really isn't. Remember the portfolio is protected and your risk is limited. Be sure to read my article on see-saw markets, because that's where the real risk of loss comes in.
I really shouldn't say risk of loss. Instead "market underperformance" in a rapidly rising market is the true downside.
Playing 2012 With SPY Options - 'What Me Worry?' [View article]
1) The market can fluctuate between AM and PM so there is no "perfect answer". If the expiring put is ITM or ATM, there is reasonable time decay between AM and PM. Since I'll hold the expiring till PM, to gather that decay, I'll roll the new one at the same time---in the PM.
2) I do exactly as you do, provided the expiring is reasonably OTM. Since the market is up 60% of the time, probability favors having a long position and an OTM expiring brings little to the game.
3) If the expiring is well OTM, I do as you do. If it is ATM or ITM, then I hold till Friday PM.
Other considerations ---- if the market moves against you on Mon-Wed, just hold tight. I've learned the hard way that Thursday is the day to make adjustments, not before and often not till Friday.
Other considerations --- if the market drops considerably during the week and vix rises, I will, sometimes, go two weeks out to take advantage of the increased volatility. Take a look on a case by case and decide if it works.
Is The Tesla Model S Green? [View article]
First, you do not seem to account for electricity that is ZERO C02 emission generated by solar, wind or water turbines. You allocate 100% emission to 67% of the output.
What about the "green" Tesla owner that charges their Tesla from the Solar cells on their California home? You ignore this completely.
You reduce Tesla mileage claims to reflect actual, but you stick with reported for ICE.
Also, one must consider that Commercial power plants are maintained for optimum efficiency. Whereas most drivers of ICE cars do not do so (tune-ups, air filters, etc.). So there is an inherent efficiency of a grid delivery system over individuals. It is more efficient to "clean and maintain" a power plant then to do so with millions of ICE cars.
All in all, I think you are trying to make a comparison in a situation that has too many variables. To ignore some, as you have done, does no one any service.
MLPs - A Reality Check ? [View article]
Well, one every big thank you for such a nice comment.
It is thoughtful people like you that encourage me to write. It makes it all worthwhile.
Thanks, again.
RK
MLPs - A Reality Check ? [View article]
We're on the same wavelength.
As one who has crossed the "caustic reef" myself, several times, no apology needed.
Actually, I found your research and arguments compelling and they were instrumental in my switching from "probably no" to "probably yes".
Don't ever give up your effort, you have a good grasp on how to research...
MLPs - A Reality Check ? [View article]
I sold off EPD for the same reasons. I may choose a non-MLP (LnCo,KMR,etc) instead of EPD to buy-in.
But, EPD is probably the most stable of them all. If there is a dip, I might take another bite of the EPD apple.
MLPs - A Reality Check ? [View article]
IF recapture does not get a step up then the non-MLPs will fare better (KMI,KMR).
There is competent authority on both sides of the recapture/step-up argument.
I have vacillated between both sides as different arguments come forth.
Right now, my position is that recapture IS stepped-up, but it is not certain, maybe just 60%/40%.
Maybe someone can come up with definitive answer. Until then, it is best to consult your legal/tax advisor and trust in them.