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Discussion in 'Introductions' started by Waikan, 13th Feb, 2018.

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  1. Waikan

    Waikan New Member

    Joined:
    14th Aug, 2008
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    South Australia, country
    Morning all. I'm retired and deriving income mainly from Dividends and rent. However, have just started to dip my toes in the water with Covered Calls to generate a little extra income, after much reading and would be interested to hear how others have fared in this area.
    Cheers Waikan
     
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  2. twisted strategies

    twisted strategies Well-Known Member

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    3rd Nov, 2013
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    welcome to posting , ( i notice you have been a member for several years ).

    sorry i can't be much help , i have looked at options several times and cannot devise a way to achieve the outcome i desire ,

    however , if extra income now is your desire , how inflation resistant are you ??

    4% RBA rates are NOT impossible in the next 5 years ( and some suggest 4% might trigger wide-spread debt-load concerns )

    the poor retail investor is normally left trying to catch up during inflationary cycles .

    cheers
     
  3. Hodor

    Hodor Well-Known Member

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    hodor
    Sounds like you have done really well for yourself.

    Care to share some of your story?

    Can't help with covered calls, I had a brief look a while back. Idea of forced sales/reduced upside in a bull convinced me it wasn't all beer and skittles, counter productive to long term buy and hold with avoiding unnecessary capital gains events.

    Do you have any school of thought you are following?
     
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  4. Waikan

    Waikan New Member

    Joined:
    14th Aug, 2008
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    Location:
    South Australia, country
    Thanks Hodor,
    Been buy and hold all my life but needed something extra (read stimulating) in retirement. Settled on low risk Covered Calls over existing portfolio. I get to keep dividends, minor capital gains, a few bob on the side and keeps the grey matter ticking. Slight Bull market is Ok but agree a decent Bull is not fertile territory for covered calls. In that instance I switch to deep-in-the-money long dated calls. Smooths out the time decay and is almost dollar for dollar with the underlying, plus gives room to move if the market turns.
    Would welcome any thoughts, suggestions. Has there ever been a forum on Covered Calls!
    Cheers Waikan
     
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  5. twisted strategies

    twisted strategies Well-Known Member

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    QLD
    the new interest might create the need for a dedicated forum ,

    i had a concept of how i wanted options to work for me , but could never find the right formula/strategy ( ditto with warrants ) , and now my situation has changed to where the current holdings ( tweaked here and there ) will have to do , but i did build in the luxury of having some stocks fully DRPed ( allowing a change to partial DRP or an exit from the plans if needed )

    i was using the selected DRP plans to help resist inflation ( when it returns with malice )
     
  6. Waikan

    Waikan New Member

    Joined:
    14th Aug, 2008
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    Location:
    South Australia, country
    Twisted strategies, Hodor,
    I've read numerous books, articles and done various courses over the years. One book that stands out that you folks may be interested in, on Covered Calls is "Options in Motion" by Nick Katiforis and Billy Macris (an Australian book). My copy published in 2012 by Major Street Publishing. I also found brokerage and other costs were hurting me initially, so reduced the number of companies I held shares in and increased the size of each remaining holding. This has seemed to reduce the costs to a reasonable degree.
    I found DRP plans became a bit of a nightmare at tax time, so preferred to aggregate my dividends and buy one substantial holding when I had sufficient funds.
     
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  7. twisted strategies

    twisted strategies Well-Known Member

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    Location:
    QLD
    a very different strategy to me , but then again you seem to have set up your affairs in a timely manner ( while my time-frame was always compressed , and reducing )

    i needed to add bulk ( ideally triple the cash value of the portfolio ) as well as lock in reliable income streams .

    brokerage costs ( i only pay when i trade ) are the price you pay , in MOST cases i prefer small opportunistic buys ( and reductions ) , up-front costs are more but that gets factored into the profit-loss calculations , and allows a wider variety of opportunities ( some companies you would never put a big chunk of cash into , like PME but it turned into a mega bonanza up more that 4000% and pays divs )

    good luck on your strategy , i definitely had my share of luck so far

    ( both me and the portfolio have to survive the next market crash , i will reassess after the dust settles , then )