Source
r/options•
alwayslookingout

Growing an IRA with options

Hey guys,

I’ll soon be able to roll over $150K of my 401K into a self-directed IRA to invest in a larger variety of equities including options. Since this is an IRA my option level will be limited to probably just covered calls, cash-covered puts, and maybe straddle. I’d like to put at least half into index funds while running the wheel strategy with the other half on companies I wouldn’t mind holding long-term if needed. Any tips or advice from those that are in the same boat would be great.

I’ve written several CCs on cheaper stocks (<$25) in a smaller account but with more capital I’ll be able to write a larger volume or more expensive tickers. However, I have no experience in determining what strikes when it comes to writing cash-covered puts. The obvious answer is with a price you’d be happy to own the stock at but I’m interested in seeing how others approach selecting a strike price and expiry or when to buy back an option.

Thanks!

Posted May 13, 2020, 3:56 AM UTC

24
zakwill•

Hello guy, don’t squander a great opportunity you have to make money within a tax deferred vehicle. CC fine, but that’s the extend of options within your IRA. Also, individual stocks greatly outperform index funds if you invest in good companies within strong sectors. Do what you want but Best of luck!!

2
dailylitquidity•

Would learn from a taxable account first before hurting your tax free vehicle

2
onequestion1168•

First off what's the difference between owning a call option and owning a 100 shares of an asset?

Have you heard of the wheel strategy? I strongly recommend looking that up

Also, I do short term strategies with options but my overall strategy is more about fundamental analysis of inserting assets

If Apple has a massive sell off I can buy calls that are 1-2 years out and just on them for month until I feel that they are profitable enough

What is your level of experience with options? Not high? Do you understand the Greeks? Do you know why IV matters?

1
alwayslookingoutOP•

Yeah. I mentioned that I’m looking to run the wheel with CCs and CSPs to earn premiums. I’ve mainly only bought calls/puts and CCs but will start dabbling in straddle/strangle and spreads soon.

I’m still learning but I do know about the Greeks, IV, LEAPs, IV crush, and how the VIX affects options pricing.

My biggest concern is will we have a second dip once Q2 earnings come out and what will happen if interest rates go into the negative.

1