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Strategies & Market Trends : Option Strategies -- Ignore unavailable to you. Want to Upgrade?

To: "Ze-Bull" who wrote (2124)	7/10/2020 4:10:39 PM
From: robert b furman	Respond to of 2591

Hi Ze, I sell puts, but must have cash and/or equity as collateral. So when I sell a put the cash comes into my account and then I have the cash pledged as collateral if and when it is assigned. So the brokerage account considers me short the put, and has a margin requirement against my short sale. I seldom have margin - sometimes when stock is assigned, but I track my dividend revenue stream to where if assigned ,my dividends pay it off quickly. I do that on my self directed IRA, which I rolled over from my 401K at age 59 1/2 and my taxable account. When I sell a put, it is always on a stock I want to own and at a dividend yield I'm happy with. Then time decay is my friend and I OK with either assignment of keeping the cash. It takes the fear out of market swings for me. I started doing this almost 8 years ago, and I wished I had figured it out decades ago. It is putting time decay on your side! "In time decay I trust!" I learned to invest from following Ted Warren back in GMI 1974. His style requires patience. When buying and owning a stock, good yielding dividends pay you to wait - so being patient is more palatable. When selling puts, time decay pays you to be patient as well. Combining the two approaches has been a slow continuous building of wealth based on investing vs. speculating. The worst that happens is a stock you own suspends or reduces its dividend. That does happen, but in the overall scheme of things, it produces very few losers and builds wealth which has a lower tax rate ( dividends at a max of 20%, personal income at a max of 37-38). I do that with half my account. The other half is lower dividend yields with a higher growth stocks. If those get a nice multiple runup - I convert them into high yielding dividend aristocrats. I'm now retired so building a dividend revenue stream has been my goal for the last 8 or so years. It took me awhile to get comfortable with that approach, but after drinking the kool aid, I love it and sleep well at night - even in March I sold nothing except far out puts based on my dividend income and am in the green on almost every put I sold. I'm of the opinion that annuity companies do this for steady income. They charge the heck out of you for their stewardship. I like to do it myself and see the account grow faster. Any questions - just ask. Glad to help us all enjoy life with some of the joys capitalism provides. That's what SI is all about! DING DING DING Have a great weekend! Bob