Sojourner
Thinks s/he gets paid by the post
- Joined
- Jan 8, 2012
- Messages
- 2,619
I'm thinking of doing a bit more of this, to generate a trickle of income (probably no more than a few hundred bucks a month) and to pick up some shares of ETFs I'd like to own anyway, but at a discount.
The reason I'm considering using margin is that I want to be able to have 2-3 put options going at a time, and if I limit myself to cash-secured puts, I'll need to tie up more cash in very low-interest settlement/holding accounts than I'd want to. By using margin, I can keep most of my cash in higher yielding accounts and only transfer it over if my puts get exercised (which I've read happens only about 10% of the time).
I know the conventional wisdom is that using margin to sell puts is a high risk strategy, but in my case, with the fairly small amounts of trading I'd be doing, and the fact that I do (and will) have enough cash to cover any purchases "put" to me, I'm not sure I see it as very risky.
Also, any thoughts about using Vanguard to do this type of options trading? I get 25 free trades with them each year, which I figure I should use up before paying for trades somewhere else.
Welcome any and all advice or thoughts about this plan.
The reason I'm considering using margin is that I want to be able to have 2-3 put options going at a time, and if I limit myself to cash-secured puts, I'll need to tie up more cash in very low-interest settlement/holding accounts than I'd want to. By using margin, I can keep most of my cash in higher yielding accounts and only transfer it over if my puts get exercised (which I've read happens only about 10% of the time).
I know the conventional wisdom is that using margin to sell puts is a high risk strategy, but in my case, with the fairly small amounts of trading I'd be doing, and the fact that I do (and will) have enough cash to cover any purchases "put" to me, I'm not sure I see it as very risky.
Also, any thoughts about using Vanguard to do this type of options trading? I get 25 free trades with them each year, which I figure I should use up before paying for trades somewhere else.
Welcome any and all advice or thoughts about this plan.