Just curious if more folks here are trading for their daily bread or to beef up/build a nice retirement fund? I've generally done the investing thing more than the trading bit, so Ive preserved my capital and limited losses, but also have had some real long spells of no action/bag holding. What I'd really like is to be able to spot more moves, more frequently (wouldn't we all). It's simple math, sure. $2 million at 5% is 100k a year. God bless you if you have that kind of capital. Me, I'm barely playing with a full deck, nevermind $2 million in the bank! So whats the other angle? How much capital should an income trader have to comfortably withdraw an income? What are some tips, psychological tricks, magic spells, etc. that you income traders use to avoid blowing it all and keep the gravy train chugging along?
*Brushes up, briefly* I have done some limited research into options, but have not actually ever traded any. Looks like I've got some reading to do.
Done correctly, its a good way to boost your returns with little risk. If you are long TSLA, but you feel the stock has moved ahead of itself, you can write a call option, eg: Sell to open the Dec 220 call @ 4.85 this means that you will get $485 for selling that call option. If TSLA closes above $220, you will be forced to sell 100 shares of TSLA at $220. So if TSLA is at $250, you will only get $220 for it. However, if TSLA is below $220 by option expiry in Dec, that call option will expire worthless, meaning you keep your stock and that $485. You can also exit that trade any time before that. This may sound complicated at first, but take the time to read up if this interests you.
Thanks, Gil! Sounds promising for sure. In the example you gave, would there actually be buyers for options that far out of the money? Say Im long LVS, but dont see it going passed 60 by New Year's, I could write a call with a $70 strike price and someone would actually buy it? Where is the point of diminishing returns? Time to go down the youtube rabbit hole...
I like to use closed end funds (CEF's) as part of my income portfolio. They have similarities to ETF's but are not the same. They are managed funds with holdings in just bonds, just equities or combined. They might focus on a particular industry or sector etc. CEF's have a NAV price and a selling price. I look for those selling below NAV for a discount. If price is 10% below NAV I am paying 90 cents for a dollar's worth of asset and collecting in the range of 5 to 8% in dividends. They are a little tricky to analyze but IMHO, worth the effort. I monitor the NAV to Price and type of distributions to see if I need to sell.
