Should you sell options against your S&P 500 index fund shares? In this video, I explain why I transferred assets from my Roth IRA at Vanguard to tastyworks. I’m going to buy 100 shares of SPY and sell covered calls against the position in the new brokerage. I’ll use the profits from selling covered calls to buy more shares of Vanguard Total Stock Market Index Fund (VTI) inside my tastyworks Roth IRA. This is index investing with options. Yes, I’m mixing passive index investing with active options trading. Let’s find out if this strategy will outperform the index over time.
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Timeline
0:00 Intro
1:19 Why tastyworks?
2:11 Then what?
2:23 Why buy SPY
2:54 What is this magical strategy?
4:03 What about dividends?
4:33 Where will covered call profits go?
4:56 Still an index investor?
5:48 What about Vanguard?
7:45 Will you let us know how it goes?
8:08 Did you invent this strategy?
8:40 Why do this in a Roth IRA?
9:01 Final thoughts?
9:43 Blooper
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I trade options at tastyworks and you can too! 🍒 Use my referral link: …(read more)
LEARN MORE ABOUT: IRA Accounts
TRANSFER IRA TO GOLD: Gold IRA Account
TRANSFER IRA TO SILVER: Silver IRA Account
REVEALED: Best Gold Backed IRA
Selling covered calls inside of a Roth IRA is an investment cheat code the majority of people haven't discovered. Roth's offer unique tax protections that allow certain strategies to be highly profitable. For example, selling at the money covered calls as often as possible…. keep 100 shares in the portfolio, sell atm calls, keep the money from the premiums in a separate cash pool. When contracts are exercised, you can withdraw money from the cash flow to make up the difference so you can maintain 100 shares.
Leveraged etf like UPRO and TQQQ have significantly lower share prices, so it requires less Capital to get started. I've spent a lot of time using Excel to back test these strategies. I'll spare you the detail, but if you aren't burdened by earned income and capital gains taxes, it's like you're using cheat codes.
Why not sell cover calls on ALL of your position ?
Need update please, how did you do ?
True!
Hey, How is this working out for you? can you do a follow up video ?
Sounds like a great strategy! I have to roll over my pension within a year and I want to be in control and sell covered calls within the IRA. Could you explain again how the covered call premium is taxed while it is in the Roth IRA?
Good video. One thing thou, SPY isn’t an index fund, it’s an ETF. SPX actually is an index fund, and if you were trading it in your personal account it would be subject to the 60/40 rule, while SPY is subject to income tax.
did you create an IRA in tastyworks too? or not?
I think it will do fine.
Just curious, how are you going to manage risk if SPY drop 50%? And I’m curious your asset allocation ratio? And if the market tanked would you consider selling covered puts? I think it’s an interesting idea what you’re doing.
How's your strategy going? Very interested to see how it works out for you, I have thought about doing the same type of strategy.