Covered calls and Cash secured puts in TLT, GLD and SLV

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Re: Covered calls and Cash secured puts in TLT, GLD and SLV

Post by modeljc » Fri Feb 11, 2022 4:23 pm

Cortopassi wrote:
Mon Jan 31, 2022 8:27 pm
I won't dispute most of your statement.

Currently I sell calls at the money. If they were called I then sell puts at the same strike that the call strike was at, effectively leaving the underlying flat, so I am participating neither in the gains or the losses.

This has worked so far.

I can see the situation where I get called out because the underlying had a good run, and I couldn't pull any premium from a put because it would be too far out of the money.

Not sure if this is relevant yet or not, but the weekly calls I am doing only have five days to move before expiration, that may help in limiting outlier moves or longer term trends that might get longer term options in trouble.
Can you share the number of gold Calls you write 5 days before expiration and an example of the premiums received. Interested in what
you earn in 5 days on $100,000. I know this changes each month. Maybe what is to be earned in a year with also writing puts if necessary.
Hope this is clear.

Gold comes out of the ground for $800 and may trade flat for years.
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Re: Covered calls and Cash secured puts in TLT, GLD and SLV

Post by Cortopassi » Fri Feb 11, 2022 7:35 pm

Sure. I am writing on SLV GLD and TLT.

I am writing 6 GLD calls in total, so very close to 100k. My premiums over the past few weeks have ranged from .76 to 1.06, so $76 to $106 per contract. On a percentage of the underlying basis, the best premium is for SLV, followed by GLD and then TLT.

On a percentage from Jan 3 of the value I am writing on, SLV has returned 2.95%, GLD 1.19% and TLT 0.93%. So that’s for 6 weeks of writing with the first two weeks really small when I was testing out my emotions.

Today was crazy. I had not planned on writing all my GLD and no TLT because it fell so far, but after 1:30 when they spiked, I was able to write and get decent premium, 2 hours before expiration.

All my SLV and GLD shares will be called out, and some TLT, so Monday I will write puts.

I’m still trying to decide to continue weekly or go for longer expirations. It’s not a lot of management, but it does make me follow maybe a little more than I care to.

But my main emphasis is to prove to myself whether or not this can work long term for retirement income.
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Re: Covered calls and Cash secured puts in TLT, GLD and SLV

Post by vnatale » Sat Feb 12, 2022 1:57 pm

Cortopassi wrote:
Fri Feb 11, 2022 7:35 pm

Sure. I am writing on SLV GLD and TLT.

I am writing 6 GLD calls in total, so very close to 100k. My premiums over the past few weeks have ranged from .76 to 1.06, so $76 to $106 per contract. On a percentage of the underlying basis, the best premium is for SLV, followed by GLD and then TLT.

On a percentage from Jan 3 of the value I am writing on, SLV has returned 2.95%, GLD 1.19% and TLT 0.93%. So that’s for 6 weeks of writing with the first two weeks really small when I was testing out my emotions.

Today was crazy. I had not planned on writing all my GLD and no TLT because it fell so far, but after 1:30 when they spiked, I was able to write and get decent premium, 2 hours before expiration.

All my SLV and GLD shares will be called out, and some TLT, so Monday I will write puts.

I’m still trying to decide to continue weekly or go for longer expirations. It’s not a lot of management, but it does make me follow maybe a little more than I care to.

But my main emphasis is to prove to myself whether or not this can work long term for retirement income.


My heart roots for you but my head says it will not work. I believe too much in the Efficient Market Hypothesis and any inefficiencies in it being difficult to exploit. Plus you are going against those who are smarter than you in this, spend more time on it, and have better tools than you. What sticks in my mind is someone saying doing what you are doing is like playing tennis against someone you do not know and it turns out you are playing Serena Williams.
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Re: Covered calls and Cash secured puts in TLT, GLD and SLV

Post by Cortopassi » Sat Feb 12, 2022 2:55 pm

Thanks Vinny. You'll have a front row seat. I plan on keeping this updated for a year maybe once every couple weeks.

One change I am going to make which will make managing this easier is to use options that expire in 30-45 days, vs weekly. Generally less dollar potential, but easier to stay on top of.
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Re: Covered calls and Cash secured puts in TLT, GLD and SLV

Post by Cortopassi » Tue Feb 15, 2022 3:27 pm

Did some segregating of accounts and balances the past few days to isolate my continued PP holdings (now a much truer cash/gold/bonds/stocks setup) and my option writing. Will allow for much simpler tracking. I was hurting my brain trying to deal with spreadsheets linking to too many accounts.

I also transitioned to writing 30-45 days to expiration. Weeklies were just too volatile, with little opportunity to roll if things went the wrong direction. Much more relaxed attitude... if a setup didn't present itself today, just wait.

Also did a truer check on account values at the beginning of the year with my previous setup and with the option writing.

Currently the option writing accounts are 2.85% above where they would be if they were still allocated per the PP.
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Re: Covered calls and Cash secured puts in TLT, GLD and SLV

Post by Cortopassi » Thu Feb 24, 2022 8:32 am

Well...at least short term, my segregating accounts for option writing had me pretty much getting all into cash into two accounts, and still pretty much in cash in those accounts. Total across accounts I am 41% in cash and 21% in gold, 17% in bonds and 21% in stocks.

Not a bad thing given the past few days and last night.

Now can I actually take advantage of this is the million dollar question.
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Re: Covered calls and Cash secured puts in TLT, GLD and SLV

Post by Cortopassi » Fri Mar 11, 2022 4:02 pm

The past couple weeks with Ukraine have been interesting. I have been able to take advantage of the ups and downs in GLD, SLV, TLT and SPY to get in and out of cash secured puts and covered calls at a (so far) 100% success rate with nothing needing rolling yet.

Maybe it has something to do with watching these closely, some since 2008.

You just know when gold goes vertical that it will always reverse, no matter if there is a war going on or not.

On the two account I am exclusively writing options on, the total value is -1.42% below the start on Jan 3 (I still own some TLT shares in both)

If I had continued the PP allocation in those two accounts, they would be down 4.91%.

I assume most here are pretty happy recently that gold is in the PP.
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Re: Covered calls and Cash secured puts in TLT, GLD and SLV

Post by vnatale » Fri Mar 11, 2022 4:19 pm

Cortopassi wrote:
Fri Mar 11, 2022 4:02 pm

The past couple weeks with Ukraine have been interesting. I have been able to take advantage of the ups and downs in GLD, SLV, TLT and SPY to get in and out of cash secured puts and covered calls at a (so far) 100% success rate with nothing needing rolling yet.

Maybe it has something to do with watching these closely, some since 2008.

You just know when gold goes vertical that it will always reverse, no matter if there is a war going on or not.

On the two account I am exclusively writing options on, the total value is -1.42% below the start on Jan 3 (I still own some TLT shares in both)

If I had continued the PP allocation in those two accounts, they would be down 4.91%.

I assume most here are pretty happy recently that gold is in the PP.


Isn't Bud the ultimate bellwether here?
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Re: Covered calls and Cash secured puts in TLT, GLD and SLV

Post by dualstow » Fri Mar 11, 2022 6:20 pm

Well done, Corto!
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Re: Covered calls and Cash secured puts in TLT, GLD and SLV

Post by Cortopassi » Fri Apr 01, 2022 2:07 pm

Monthly update.

Options accounts current returns since Jan 3, -0.69%
Same accounts as they were in B&H PP would be -4.63%

Only reason I am negative in the options accounts is I have yet to get rid of the TLT shares they hold (I have some covered calls on them now that should get them called away)

Overall realized cash is below. This is using on average about $200 to 300k of capital tied up for cash secured puts at any one time. This is for a full three months, with the last 2 months being more active (meaning using more capital, not time-wise).

Knowing how GLD and SLV and TLT work, generally, has been helpful in getting good entry point.

Image
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Re: Covered calls and Cash secured puts in TLT, GLD and SLV

Post by Cortopassi » Thu Apr 14, 2022 2:36 pm

I have been writing covered calls on TLT for most of the recent drop. It certainly doesn't capture all the loss, but certainly buffers it. Just today I closed 123 strike calls, opened 122s, closed 122s, opened 121s, and likely will close those and open 121s for next week.

Since I started TLT option writing in Jan it was $143 a share, currently about $120.60, $22.40 drop, and I captured $9.40 of that drop with covered calls along the way. So almost 50% buffered.

Not perfect, but felt better than just watching it drop with no recourse.

I have been desperately trying to get called out of these shares for a while but it just keeps dropping, dammit!
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Re: Covered calls and Cash secured puts in TLT, GLD and SLV

Post by Cortopassi » Fri Jun 10, 2022 8:37 am

About two months since my last update, for those interested:

--I have done very little option writing in the past two month. I still have some open on GLD and SLV, some profitable, some not, rolling as needed. My portfolio is down 3.65%. Had I left it as my allocation was on Jan 3, I would be down 13.95%.

--I have had 0% stocks and LTTs in my portfolio since May 4th (and had already cut down significantly since Jan 3). Only gold and cash (in 1.25% savings acct and i-bonds). I am a internally a perpetual bear it seems. This was all intended to be part of a shift to writing options, but I have not lately.

--Currently my thoughts are I stay with this allocation and slowly allocate back into stocks during the next 6-12 months. I personally do not feel there's any rush, and that we have a long way to go sideways and down, but that's the bear in me talking.

--I have "saved" way more by being out of the market than my option writing by a wide margin.

--I don't pretend to know whether we are in a long term downtrend or not. All I know is where I am at currently lets me sleep at night.

--My hope is (!!!!) that I can time my re-entry exactly at a long term market bottom, go 75% into stocks and ride into a beautiful retirement sunset... ;)

Hope everyone is doing well!
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Re: Covered calls and Cash secured puts in TLT, GLD and SLV

Post by barrett » Fri Jun 10, 2022 10:28 am

Good to get your update, Cortopassi. It seems this has become less of a PP forum and more of a "this is what I am doing now" place. Which is fine.

Good that you have an allocation that allows you to not worry at the moment. Wife and I have been loading up on I-Bonds (we even followed jhogue's I-Bond Gift box suggestion). We hold no long treasuries for now and have been using cash/T-Bills to buy the stock dips. Hopefully we don't chase the S&P 500 down to zero!

You sure you don't want to stick around and debate abortion and guns? Joking aside, this place has been more mellow in recent months, seemingly with more listening to opposing points of view. At least that is my take.
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Re: Covered calls and Cash secured puts in TLT, GLD and SLV

Post by Cortopassi » Fri Jun 10, 2022 11:00 am

barrett wrote:
Fri Jun 10, 2022 10:28 am
You sure you don't want to stick around and debate abortion and guns?
Probably not!

Ohh, gift box! I need to look into that!

I also moved some cash to Bask Bank, 1.25% rate with no weird rules. Ally also has done multiple increases in the past month or so and is at 0.9%. Better than nothing...

I have my opinions, but I generally change topics on any attempts to discuss politics outside my immediate family.
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Re: Covered calls and Cash secured puts in TLT, GLD and SLV

Post by joypog » Fri Jun 10, 2022 12:24 pm

barrett wrote:
Fri Jun 10, 2022 10:28 am
Good to get your update, Cortopassi. It seems this has become less of a PP forum and more of a "this is what I am doing now" place. Which is fine.
How many folks around here are actually in the PP? I can only think of maybe 3 folks?

I suspect the failure of Gold to rise during this everything drop (after missing out on the big Large Cap run of the past decade) has dampened the mood towards the investing side of the game.

And the population who adhere to the PP for quiet peace of mind are exactly the folks who DON'T hang out on an internet investing forum.
1/n weirdo. US-TSM, US-SCV, Intl-SCV, LTT, STT, GLD (+ a little in MF)
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Re: Covered calls and Cash secured puts in TLT, GLD and SLV

Post by snedgar » Fri Jun 10, 2022 4:41 pm

I lurk but don't post much, but allin for PP/GB since 2008.

I'm not dogmatic but just can't find anything better for my needs.

I suspect there are a lot of us here.

BTW, I've been following your posts/thought processes as you wrestle with portfolio/investment strategy. My advice would be to not jump in with both feet until you are 100% convinced with it for a while. The worst thing you can do is jump in, have second thoughts when one of the components loses a couple percent, sell at a loss and then spend the next 5 years complaining on chat boards that it doesn't work ... on second thought, that's what makes the chat boards work! Good luck!
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Re: Covered calls and Cash secured puts in TLT, GLD and SLV

Post by ryanarin » Fri Jun 10, 2022 5:26 pm

I had to unlurk just to answer this post as well. Also been all in the PP since 2008 - mid 40s, and it serves me very well as a self-employed person with unpredictable income. I would probably have never gotten into the stock market at all if I had not been introduced back then- I am reluctant to be a very risky investor when I don't have a job.
It has served me very well- have also really appreciated the perspectives on this forum, which I have read for years. Also I really miss Sophie.
Now back to lurking...expect me back later this summer when I likely have to sell some SGOL 8)
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Re: Covered calls and Cash secured puts in TLT, GLD and SLV

Post by joypog » Fri Jun 10, 2022 6:42 pm

snedgar wrote:
Fri Jun 10, 2022 4:41 pm
BTW, I've been following your posts/thought processes as you wrestle with portfolio/investment strategy. My advice would be to not jump in with both feet until you are 100% convinced with it for a while. The worst thing you can do is jump in, have second thoughts when one of the components loses a couple percent, sell at a loss and then spend the next 5 years complaining on chat boards that it doesn't work ... on second thought, that's what makes the chat boards work! Good luck!
Hahahha thanks! Your advice is well taken. We're definitely investing into the market with a slow burn rate - will be about a year before our cash portion will be down to our target AA.

But yes, after that, I'll join the crowd of grouch's that complain about Gold and LTT's destroying my future!
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Re: Covered calls and Cash secured puts in TLT, GLD and SLV

Post by vnatale » Fri Jun 10, 2022 9:45 pm

barrett wrote:
Fri Jun 10, 2022 10:28 am

Good to get your update, Cortopassi. It seems this has become less of a PP forum and more of a "this is what I am doing now" place. Which is fine.

Good that you have an allocation that allows you to not worry at the moment. Wife and I have been loading up on I-Bonds (we even followed jhogue's I-Bond Gift box suggestion). We hold no long treasuries for now and have been using cash/T-Bills to buy the stock dips. Hopefully we don't chase the S&P 500 down to zero!

You sure you don't want to stick around and debate abortion and guns? Joking aside, this place has been more mellow in recent months, seemingly with more listening to opposing points of view. At least that is my take.


And, it has even become a place where people put things here after 6 PM (EST)!
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Re: Covered calls and Cash secured puts in TLT, GLD and SLV

Post by Kbg » Fri Jun 10, 2022 10:59 pm

joypog wrote:
Fri Jun 10, 2022 6:42 pm
But yes, after that, I'll join the crowd of grouch's that complain about Gold and LTT's destroying my future!
That deserves the coveted ROFL acronym. Well played
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Re: Covered calls and Cash secured puts in TLT, GLD and SLV

Post by dualstow » Thu Jun 16, 2022 1:29 pm

Cortopassi wrote:
Fri Jun 10, 2022 8:37 am

--I have had 0% stocks and LTTs in my portfolio since May 4th (and had already cut down significantly since Jan 3). Only gold and cash (in 1.25% savings acct and i-bonds). I am a internally a perpetual bear it seems. This was all intended to be part of a shift to writing options, but I have not lately.

Hope everyone is doing well!
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Re: Covered calls and Cash secured puts in TLT, GLD and SLV

Post by Vil » Thu Jun 16, 2022 1:57 pm

joypog wrote:
Fri Jun 10, 2022 12:24 pm
How many folks around here are actually in the PP? I can only think of maybe 3 folks?
Do you have statistically significant data-set for your conclusion ? ;D I have US-PP since 2.5 years, only contributing 1/year to keep the percentages. Oddly enough I do not even have a look at it. I guess my VP is my European bamboocha, the place for all the stupid things I can think of.
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Re: Covered calls and Cash secured puts in TLT, GLD and SLV

Post by Cortopassi » Thu Jun 16, 2022 3:01 pm

dualstow wrote:
Thu Jun 16, 2022 1:29 pm
Cortopassi wrote:
Fri Jun 10, 2022 8:37 am

--I have had 0% stocks and LTTs in my portfolio since May 4th (and had already cut down significantly since Jan 3). Only gold and cash (in 1.25% savings acct and i-bonds). I am a internally a perpetual bear it seems. This was all intended to be part of a shift to writing options, but I have not lately.

Hope everyone is doing well!
Don’t you know the golden rule? No one wants to hear from successful market timers. Only those who fail are welcome. O0
Yeah, whether successful or not depends on re-entry. I want to time the exact bottom, like March 9, 2009...! ;)

The market right now is quite weaker than I would have thought. I would have bet money today was going to be a relief rally since the news is out on the rate hike.
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Re: Covered calls and Cash secured puts in TLT, GLD and SLV

Post by Ethan92 » Tue Aug 23, 2022 3:23 pm

As the least "risky" case of selling way OTM calls on GLD, to try to not get the shares called, given what I've seen recently, you could probably easily pick up $25 per 100 share holdings per weekly option that way way OTM.
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Re: Covered calls and Cash secured puts in TLT, GLD and SLV

Post by Cortopassi » Tue Aug 23, 2022 4:00 pm

Ethan, you know I toy with that in my mind -- is it worth $25 to even log the CC in as a trade, and have it take up space in my mind.

Mostly I decide not to take those way OTM trades.

====

Since I got pinged on this post, here's my August update!

I am still out of the market. Missed the summer bull run, at least in stocks. I am currently 78.7% cash. At least now, between SHV, i-bonds and 2.2% savings accounts, there is some better feeling about being in cash! My effective rate is currently 3.48%.

I notice on Jun 16, I wrote "The market right now is quite weaker than I would have thought. I would have bet money today was going to be a relief rally since the news is out on the rate hike."

Literally that was one day before the market started upwards for the past two months. Just goes to show I know nothing....

I have sold precious few puts. I have run through a lot of trading books (technical, fundamental, trend, psychology) and have tried a few styles.

What I am not:

--A short term trader. Do not have anywhere near the right mental attitude for it. Never will.
--A technical trader. Other than simple moving averages to determine a trend, all the fancy schmancy indicators, I have looked at just didn't resonate with me. And short term, did not work.
--A trader in general. I don't want to trade. I just want to put my money somewhere and come back and see more of it with little input from me!

So I have looked at but not invested in things like DIVO and JEPI.

I've also looked hard at immediate annuities, if anyone else has any I'd be interested in the experience. With interest rates back up, I am highly leaning toward putting some portion of my net worth with a good company and getting a lifetime income stream.

Bringing my youngest to college next week. Oldest started her job in Chicago two weeks ago. Going to have an empty nest three weeks from now! :-[
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