Author Topic: What are you buying today?  (Read 1457323 times)

sleepydragon

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Re: What are you buying today?
« Reply #3750 on: May 03, 2019, 07:54:09 PM »
I wrote some WFC 48-strike May 17 puts.

Boilermaker, why you don’t short longer term put, say 1 year? The put premium will be taxed at long term capital gain and there is a higher chance it will expire worthless.


zippy1

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Re: What are you buying today?
« Reply #3751 on: May 03, 2019, 11:47:43 PM »
I wrote some WFC 48-strike May 17 puts.

Boilermaker, why you don’t short longer term put, say 1 year? The put premium will be taxed at long term capital gain and there is a higher chance it will expire worthless.
The premium is higher if the date is very short? Also, if you are doing this in an IRA or 401K account, then the tax is not so much of a consideration?

Mephistopheles

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Re: What are you buying today?
« Reply #3752 on: May 04, 2019, 04:19:17 AM »
I wrote some WFC 48-strike May 17 puts.

Boilermaker, why you don’t short longer term put, say 1 year? The put premium will be taxed at long term capital gain and there is a higher chance it will expire worthless.
The premium is higher if the date is very short? Also, if you are doing this in an IRA or 401K account, then the tax is not so much of a consideration?

I use Merrill edge which doesn’t allow naked put writing in IRAs. Is this allowed with any other broker ?

gfp

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Re: What are you buying today?
« Reply #3753 on: May 04, 2019, 04:55:43 AM »
Yes, several brokers allow this in an IRA, but the puts are required to be “cash covered” or whatever you call it - so not really “naked” like a naked call sale would be. In reality it is basically identical to a limit buy order on the underlying- not too exotic for a retirement account

aws

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Re: What are you buying today?
« Reply #3754 on: May 04, 2019, 09:15:37 AM »
I wrote some WFC 48-strike May 17 puts.

Boilermaker, why you don’t short longer term put, say 1 year? The put premium will be taxed at long term capital gain and there is a higher chance it will expire worthless.

Short options are never LTCG regardless of the duration if they expire worthless.  Nor short anything for that matter, as your purchase date is always considered the same as the sale date.

boilermaker75

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Re: What are you buying today?
« Reply #3755 on: May 04, 2019, 11:32:57 AM »
I wrote some WFC 48-strike May 17 puts.

Boilermaker, why you don’t short longer term put, say 1 year? The put premium will be taxed at long term capital gain and there is a higher chance it will expire worthless.
The premium is higher if the date is very short? Also, if you are doing this in an IRA or 401K account, then the tax is not so much of a consideration?

Exactly, there is a rapid decay of the time premiums with a shorter term put. So typically my time to expiration is between 1-day and 2-months.

Edit: But 90% of the time when I write a put the expiration is less than a month away.
« Last Edit: May 04, 2019, 12:47:26 PM by boilermaker75 »

boilermaker75

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Re: What are you buying today?
« Reply #3756 on: May 04, 2019, 11:33:58 AM »
Yes, several brokers allow this in an IRA, but the puts are required to be “cash covered” or whatever you call it - so not really “naked” like a naked call sale would be. In reality it is basically identical to a limit buy order on the underlying- not too exotic for a retirement account

My IRA is with Schwab and they allow writing cash-covered puts. It is exactly the same as writing a covered call.

boilermaker75

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Re: What are you buying today?
« Reply #3757 on: May 06, 2019, 07:56:21 AM »
Wrote BAC 30-strike May 10 expiration puts for $0.26 per share and May 17 expiration puts for $0.41 per share.

Cardboard

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Re: What are you buying today?
« Reply #3758 on: May 06, 2019, 11:03:25 AM »
T-MEG

rkbabang

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Re: What are you buying today?
« Reply #3759 on: May 06, 2019, 11:08:01 AM »
Yes, several brokers allow this in an IRA, but the puts are required to be “cash covered” or whatever you call it - so not really “naked” like a naked call sale would be. In reality it is basically identical to a limit buy order on the underlying- not too exotic for a retirement account

My IRA is with Schwab and they allow writing cash-covered puts. It is exactly the same as writing a covered call.

I write cash covered puts in both my IRA and 401K with Fidelity.