Our valued sponsor
What are the good option strategy for Low risk monthly income?
- Thread starter troubled soul
- Start date
there is not a magic option strategy that always works, you have to adapt to a number of factors such as your personal circumstances and targets, if you are an investor or a trader (different perspectives) and most of all you have to see how is it going the market (or security) you wish to invest in, and in particular how the volatility of that security is moving (not just the price of the security).
If you are an investor for long term and you wanted to buy a security anyway (whether an index or a commodity or a stock or an ETF or whatever) sure you can try to improve your performance with covered calls or simply sell a naked put 1 or 2 sigma (standard deviations) below current price until you get "caught" (exercised) and you say " no problem, i wanted to buy anyway".
If you wish to be an active option trader there are many strategies you can evaluate. Be careful with calendar spreads they are rather difficult to analyse and manage (most software dont show you the actual correct outcome charts as they are very tricky). Short straddles/strangles are exciting but when possible better to cover them (iron condor and similar) to sleep better at night. Ratio spreads can be rather interesting.
If you are an investor for long term and you wanted to buy a security anyway (whether an index or a commodity or a stock or an ETF or whatever) sure you can try to improve your performance with covered calls or simply sell a naked put 1 or 2 sigma (standard deviations) below current price until you get "caught" (exercised) and you say " no problem, i wanted to buy anyway".
If you wish to be an active option trader there are many strategies you can evaluate. Be careful with calendar spreads they are rather difficult to analyse and manage (most software dont show you the actual correct outcome charts as they are very tricky). Short straddles/strangles are exciting but when possible better to cover them (iron condor and similar) to sleep better at night. Ratio spreads can be rather interesting.
Maybe you should just buy JEPI and leave it to the pros.
Unfortunately, I haven't found anything that comes close to JEPI that's domiciled in Ireland.
I can also suggest looking into JEPQ if you want a NASDAQ equivalent to JEPI.
If one is eager to take more risk there is this relatively new SVOL ETF: "SVOL is an actively managed portfolio that aims to provide income via short exposure to S&P 500 VIX short-term futures, reset daily." that pays a juicy monthly yield.
This is interesting. Can you tell how it differs from the other short volatility funds that blew up in 2018? How much risk is covered by the options it holds?
I can't tell more what is described on the Simplify website. This ETF clearly lacks history (Inception Date: 05/12/2021), and it could be better to wait and see how it behaves during bull/sideways markets.
From what I read, a strategy could be getting in at a discount when volatility is high (VIX > 30) and sell when VIX < 20.
None. I would like to explain.
1. What you want is it seems a SECURE monthly income. That sounds like short term bonds in the financial market.
2. Every option strategy that would beat 1. would cause an arbitrage opertunity. And for that kind of stuff, markets are ver efficient. So there is actually no way.
You could try Bonds or High Dividends ETFS's with higher risk of course.
The problem with options are, they are build on top of the underlying financial structures. They can't beet the fundament so to say. The extra structure just costs you some money, so it is not free and that's the reason such strategy would not really work.
Every investment, by definition, carries a risk.
Explain arbitrage between bonds and VIX or stock options
Easy. If you have a option strategy that yields 5% risk free (low risk.). You could borrow money at 4% (short the bond) and invest everything in your strategy.Explain arbitrage between bonds and VIX or stock options
So it doesn't make sense to think of some magic option strategy at all. Especially since options are derivatives, producing them creates additional costs.
You can read on this, there just no free lunch.
https://en.wikipedia.org/wiki/Fundamental_theorem_of_asset_pricing
For the record, JEPI/JEPQ are not available on IBKR CE (Hungary) but are available to EU residents via Swissquote.
"40-FUSD, 40-TDIV, 20-VEUD But consider taxes. If you own US stocks somehow (via options) you could claim your US withheld taxes. With Ireland ETFs targeting US it may not be that effective. But there is US estate tax, so if you plan to hold more than 60000 USD have a plan to sell excess before you die. Still taxes is most difficult question depending on your country. Check accumulative ETFs."
I have a question regarding withholding tax on dividends in the context of covered call ETFs such as JEPI/JEPQ.
Option premiums paid out by such ETFs are actually taxed as capital gains in the US. Therefore, in theory at least, these funds "dividends" shouldn't actually be subject to WHT on dividends if paid out to non-US persons. Correct?
https://home.treasury.gov/system/files/131/WP-15.pdf
Option premiums paid out by such ETFs are actually taxed as capital gains in the US. Therefore, in theory at least, these funds "dividends" shouldn't actually be subject to WHT on dividends if paid out to non-US persons. Correct?
https://home.treasury.gov/system/files/131/WP-15.pdf
Similar threads
Latest Threads
-
-
-
Mercury bank - 3% currency conversion fee
- Started by atlantic
- Replies: 1
-
-
Best UAE assistance for Visa, property purchase, and company formation?
- Started by Danteblue
- Replies: 2
