Comment by deanmoriarty 3 days ago
Retire. I lived fairly frugally since when I entered the workforce 15 years ago and saved a bunch, so I like to think I’m financially prepared for it. I hope to retire soon even if AI doesn’t replace me :-)
If my financial situation won’t be enough, I like to think that things would be so bad that not even keeping a job would have helped.
Options are a great way to make money until they’re not. Selling covered calls will limit your upside and you’ll miss out on big gains when the stock takes off. Selling covered puts can make you buy a stock as it’s cratering on bad news. I can see the appeal, but it’s too risky for me. I think the typical investor will end up with less in the long run, and there’s a reason covered calls ETFs don’t keep up with the gains of the market, even with dividends reinvested.
Another things that’s easy to over look is being forced to sell your stock when the covered call you sold ends up in the money means you may have to pay taxes on the gains, which also eat into potential upside.
You selling options with that nest egg? A lot of people have retirement accounts just sitting there. You can start making income far in excess of dividends.
For instance, an anemic stock like Ford will yield the quarterly dividend amount each month if you sell options. If you sell puts you can also keep the cover cash in a 4% money market account. Cash just pours in.
Take a look at the option chain on VZ and PFE right now. Brokerages (Fidelity in my experience) have great free courses and tools. YouTube is loaded with good info.