Anonymous wrote:

Anonymous wrote:I've been following folks who do this for a living. They're the first to tell you not to get into it without a huge amount of careful education and research - plus paper trading. They say you can lose your shirt doing this if you don't know what you're doing.

Selling covered calls and cash secured puts is very low risk.

But it’s not going to make you rich and it doesn’t produce reliable retirement income, which is what OP wants.

Anonymous wrote:I've been following folks who do this for a living. They're the first to tell you not to get into it without a huge amount of careful education and research - plus paper trading. They say you can lose your shirt doing this if you don't know what you're doing.

Selling covered calls and cash secured puts is very low risk.

I've been following folks who do this for a living. They're the first to tell you not to get into it without a huge amount of careful education and research - plus paper trading. They say you can lose your shirt doing this if you don't know what you're doing.

Anonymous wrote:

Anonymous wrote:Lets stay in touch. Tell me what positions you take so I can take the other side of that trade.

That’s just as bad.

No, buying options is much safer, because the downside risk is limited.

Anonymous wrote:

Anonymous wrote:I have probably 10+ years of selling options. 100k per year on a 500k portfolio would require extreme risk that would wipe you out more often than not.

I would aim for .50% per month, which is difficult in itself. This is selling puts.

Selling covered calls won't wipe you out but will really cap your gains over the long run. For short term windows, it's fine. Selling uncovered calls is not smart.

Newbie question.. If 0.5% per month (6% p.a.) is difficult, why even bother? Doesn't the S&P return much more than that over the long-term?

QP here. It's a good question. My post is specifically talking about selling options. Most people do that to juice their returns a bit. It's not going to make you rich though, certainly not in the short term. For example I'll be fully invested in index etfs, but will sell puts on individual stocks in the same account. Or I'll sell some etf index option calls against my index etf positions (but not all). Depends on my view of the market. In an upmarket if you're short some puts, it adds a little leverage to your returns. In a downmarket, if you're short some index calls, it hedges your losses a bit. In other words, it's not a replacement for regular investing. Some people use it that way. And in some cases it works for them. But they have to take on a lot more risk and spend a lot of time on it.

Occasionally, for fun, I'll buy calls or puts for earnings where I have some conviction or the risk/reward looks good. Other times, if I spot an opportunity, I'll put on a spread. It's fun to me.

I’ve sold options the last three years. Have made around 5% annual return in that account, including taxes, deposits, etc. Certainly not a magic bullet as some claim. But not especially risky or time consuming, either. I’ll continue doing it on part of my portfolio.

Anonymous wrote:Lets stay in touch. Tell me what positions you take so I can take the other side of that trade.

That’s just as bad.

Lets stay in touch. Tell me what positions you take so I can take the other side of that trade.

You can also lose everything—that’s what my dad did. 30 years ago when he lost his entire life savings trading on options. Don’t be stupid.