Enhanced Investing results halfway through the year

Enhanced Investing results halfway through the year


In 2018 I started to more regularly:

– Sell Puts on companies I’d like to own at better valuations, not intending to adjust or anything. If a Put becomes In the Money at expiration, I’m happy getting assigned the shares. If such fall doesn’t take place, I’m happy locking the credit received from the Put contract and re-deploying.

– Sell Out of the Money Calls on stocks I own. This reduces maximum upside potential, but generates income every month during sideways, down and even limited upside market action.

– Collect dividends on the companies owned.

I put all this under the umbrella of “Enhanced Investing” and the positions/results are shared here: Enhanced Investing Results.

This is a small $20,000 amount in Tastyworks with 2:1 margin. So, buying power is $40,000.

At the end of June, a $2393.73 income has been generated after commissions, which is not bad for a $20K account.  11.97%. That’s pretty decent.

However, that’s not the real return on the account as some open stock positions are showing losses:

Realty Income (100 shares)  $283
CVS (100 shares)                 $772
AT&T (100 shares)               $515

Those three add up to $1570

So, the real balance in the account is $2392.73 – $1570 = $822.73
On a 20-gran account, that’s a +4.11% growth

Not as much as I would expect for so much activity, but decent taking into account that the SPX is up only 1.67% (2.5% with dividends).

On a taxable account, with most of these gains (except dividends) considered “short-term” (active trading) gains, the tax rate would be your marginal. So, this activity would not make sense for most people. Unless the level of out-performance is truly significant. It also would not be possible on a broker that applies a ticket charge in addition to a per contract fee. With Tastyworks, selling a Put ($1.15) and buying it back ($0.14) for a total of $1.29 makes it possible. Those 0.29 extra are due to regulatory exchange fees. It would make zero sense with a broker that charges $6.75 per order in addition to a fee per contract. Unless of course, you have very large positions.

With more than 50 positions played, the total cost of commissions Year to Date has been $109.17. Not bad at all (Buying stock costs $5.00 flat)

I’ll continue the “Enhanced Investing” activity until the end of the year and then I’ll make a decision on whether to keep tracking it in 2019.

Cheers,
LT

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