Negociação de papéis patrimoniais da optionshouse

A estratégia do colarinho.

Um colar é uma estratégia de negociação de opções que é construída através da detenção de acções subjacentes, ao mesmo tempo que se compram posições de venda e vende opções de compra contra essa participação. Os puts e as calls são ambas opções out-of-the-money com o mesmo mês de vencimento e devem ser iguais em número de contratos.

Vender 1 chamada OTM.

Tecnicamente, a estratégia de colarinho é o equivalente a uma estratégia de chamadas cobertas fora do dinheiro com a compra de uma unidade de proteção adicional.

O colar é uma boa estratégia para usar se o negociador de opções estiver escrevendo chamadas cobertas para ganhar prêmios, mas desejar se proteger de uma inesperada queda acentuada no preço do título subjacente.

Potencial de lucro limitado.

A fórmula para calcular o lucro máximo é dada abaixo:

Lucro Máx. = Preço de Exercício da Opção de Compra Curta - Preço de Compra do Prêmio Líquido Subjacente + Recebido - Comissões Lucro Máximo Lucrado Obtido Quando o Preço Subjacente> = Preço de Exercício da Opção de Compra Curta.

Risco Limitado.

A fórmula para calcular a perda máxima é dada abaixo:

Perda Máxima = Preço de Compra do Subjacente - Preço de Exercício de Long Put - Prémio Líquido Recebido + Comissões Perda Máxima Paga Ocorre Quando Preço do Subjacente O Guia de Opções.

Estratégias de alta.

Estratégias de Opções.

Opções do Localizador de Estratégias.

Aviso de Risco: Negociações de ações, futuros e opções binárias discutidas neste site podem ser consideradas Operações de Operações de Alto Risco e sua execução pode ser muito arriscada e resultar em perdas significativas ou mesmo em uma perda total de todos os fundos da sua conta. Você não deve arriscar mais do que você pode perder. Antes de decidir negociar, você precisa garantir que entende os riscos envolvidos, levando em consideração seus objetivos de investimento e nível de experiência. As informações contidas neste site são fornecidas apenas para fins informativos e educacionais e não se destinam a serviços de recomendação de negociação. TheOptionsGuide não será responsável por quaisquer erros, omissões ou atrasos no conteúdo, ou por quaisquer ações tomadas com base nele.

Os produtos financeiros oferecidos pela empresa carregam um alto nível de risco e podem resultar na perda de todos os seus fundos. Você nunca deve investir dinheiro que você não pode perder.

Minha experiência abrindo uma Vanguard ROTH IRA.

Hoje eu puxei o gatilho e abri uma Vanguard ROTH IRA. O prazo de contribuição para 2013 é 15 de abril de 2014, por isso, se você mudar rapidamente, poderá abrir um e financiar no ano passado. Depois disso, você sempre pode financiar o ano atual até essa data de 15 de abril de cada ano.

O processo em si é muito fácil e pode ser feito totalmente on-line e deve ter me levado cerca de 10 minutos para concluir, no entanto, houve alguns solavancos na maneira que eu queria perguntar a um ser humano sobre isso eu não fiz qualquer erros na estruturação da conta.

Tenha em atenção que, se decidir financiar através de transferência bancária, necessita dos fundos disponíveis hoje e o processo cria um carimbo de hora que mostra a sua conta aberta dentro do prazo, mesmo que demore alguns dias até os fundos aparecerem O outro fim. Se você optou por financiar através de um cheque, então você precisa garantir que a carta seja postada antes de 15 de abril (assim eles me disseram), mas eu não confiei nesse método, então fui para o financiamento online.

A Vanguard tem uma grande reputação no mercado como inovadora por trás dos Fundos de Índice, são fundos de baixo custo que rastreiam o mercado e, em vez de ter um Gestor selecionando ativamente quais ações vão para o fundo, reduzem custos comprando um Índice inteiro ou Setor. Durante o processo de configuração, eu chamei o Vanguard Concierge para ajudar a responder algumas perguntas, e eu aprendi algumas coisas interessantes sobre a Vanguard que eu não estava ciente, e você deveria estar também. Vou abordá-los no final deste artigo.

Abrir uma nova conta da Vanguard para segurar o ROTH IRA é muito simples:

Decida se você usará essa conta apenas para negociar com a Vanguard Funds ou se também deseja negociar fundos, ETFs e ações não pertencentes à Vanguard.

Se você não selecionar as duas opções, poderá adicioná-las posteriormente aos recursos da Corretora. No entanto, se desejar financiar imediatamente esses tipos de produto, será melhor verificar as duas caixas.

Taxas & # 8211; A Vanguard não cobrará uma taxa se você se inscrever para Declarações Eletrônicas, caso contrário, haverá uma taxa anual de US $ 20 para contas com saldo inferior a US $ 10.000. Como vou abrir duas contas por US $ 5.000 cada, estou me inscrevendo para as declarações, além disso, prefiro que elas estejam on-line e que sejam melhores para o ambiente.

Taxas de corretagem.

Para o lado da Corretora, a Vanguard cobra uma taxa por negociação, a taxa inicial é de US $ 7, mas eles não gostam de muitos operadores ativos e penalizam você por negociar demais em contas balanceadas mais baixas.

Você não está pronto para selecionar todos os seus investimentos?

Seu dinheiro tem que ir a algum lugar mesmo se você não quer investir agora, por exemplo no meu caso, quando eu abrir contas para a Sra. Saverocity eu iria verificar essa opção, depositar o montante total (apenas para 2013) em um Fundo do Mercado Monetário que é muito estável até que nos sentamos e discutimos as opções sobre onde ela gostaria de alocar os fundos. Eu não decidi financiar 2014 agora, embora eu pudesse desde que eu tenho até 15 de abril de 2015 para tomar essa decisão. Eu posso decidir que este ano eu prefiro depositar em um IRA tradicional ou algo mais. Eu acho que é provável que eu escolha ROTH novamente, mas eu não acho que seja necessário tomar essa decisão agora.

Pronto para investir e alocar seus fundos agora?

Eu abri uma conta para a senhora deputada Saverocity e eu hoje, para minha própria conta, eu estava pronto para pegar alguns fundos e ir com os investimentos. Isso pode ser um movimento bastante agressivo, já que você se depara com solicitações imediatas de alocação de ativos, o que acho um pouco intimidador. Portanto, se você não tiver certeza de onde deseja alocar, mas deseja configurar o ROTH IRA antes do prazo final de 15 de abril, selecione o Prime Money Market Fund e reserve o dinheiro enquanto considera quais fundos atendem às suas necessidades.

Depósito Mínimo para um Fundo $ 3.000.

A maioria dos fundos oferecidos está pedindo um mínimo de US $ 3.000, então se você é como eu, este é o seu primeiro investimento em ROTH e você tem o máximo de US $ 5.500 para jogar com isso não deixa muitas opções para diversidade ( bem, além do fato de que você pode comprar todo o mercado com um fundo). Você está basicamente limitado a escolher um fundo, ou talvez dois, pois há alguns que permitem um mínimo de US $ 1.000. Eu selecionei o Small Cap US e um 2060 Target Date Retirement Fund (para este último, é balanceado entre ações e bonds, e eu não estou visando 2060 para aposentadoria, eu só quero um mix agressivo, mas diversificado para equilibrar alguns dos risco na seleção de uma pequena tampa para o meu fundo principal.

Depois de mais alguns passos, basicamente é isso, sua conta é financiada por cheque ou conta bancária, como mencionado antes eu escolhi conta bancária porque os selos de tempo da minha conta abrem para hoje e eu não tenho que me preocupar quaisquer problemas com o cheque não chegar ou outros enfeites.

Depois de configurar a conta, você será solicitado a configurar o acesso on-line. Eu recomendo que você faça tudo isso agora, e assine os formulários exigidos pela NYSE, etc., referentes às suas contas. Um passo importante aqui é se inscrever para a entrega eletrônica também, isso economizará a taxa de gerenciamento de conta de US $ 20 para saldos inferiores a US $ 10.000. O bom é que este é apenas o Passo 2 na configuração de acesso on-line, então ele leva você a essa etapa sem ter que procurar E-Delivery.

Alguns fatos interessantes sobre a vanguarda que eu não conhecia.

Vanguard é bem conhecido como o proponente das metodologias de investimento passivo, como defendido por seu fundador e ex-CEO John Bogle, quando lhe é dito que a Vanguard é a melhor maneira de investir & # 8216; provavelmente é porque as pessoas estão tentando fazer com que você evite os fundos mútuos altamente carregados que estão por aí. Os fundos de vanguarda são considerados Fundos Passivos e não cobram fundos pela maioria das pessoas (pelo menos por mim, em qualquer caso).

1. A Vanguard possui 67 fundos mútuos ativamente gerenciados.

Isso também não é novidade: um dos seus fundos foi o da Vanguard Wellington Fund Investor Shares (VWELX), criado em 1929. No entanto, foi novidade para mim. Eu sempre ouvi as anedotas "comprar fundos de vanguarda, eles seguem o princípio Bogle de investimento passivo .. mas aparentemente eles não o fazem, então tenha cuidado ao escolher o seu fundo de escolha que você sabe o que você está comprando em. A boa notícia é que, embora sejam um fundo ativo, o preço da propriedade continua muito baixo em comparação com o padrão da indústria. No entanto, vale a pena notar que esta taxa de despesas de gestão não inclui uma coisa que irá impactar um Fundo Ativo mais do que um Fundo Passivo & # 8211; Mais-valias fiscais. Supõe-se que os Ganhos de Capital a Curto Prazo serão maiores quando uma empresa for negociada ativamente, já que estarão liquidando posições com mais frequência.

2. A vanguarda tem taxas de carga.

Apenas em alguns fundos admitiu, mas fiquei muito surpreso ao ver uma taxa de carregamento e taxa de resgate. Você pode certamente ver alguns que são muito mais elevados do que isso no mercado com outras empresas, mas eu sempre pensei que isso era algo que você nunca veria com a Vanguard. Observe também que esses fundos têm uma taxa maior (que a média) do que outros fundos da Vanguard.

3. A Vanguard oferece 3 níveis de serviço para sua conta.

As contas auto-direcionadas são gerenciadas por você, mas têm acesso ao suporte on-line e no telefone. Falei hoje com uma pessoa muito agradável e experiente do seu serviço de concierge que realmente sabia o seu material. Esse serviço é oferecido como padrão em qualquer conta da Vanguard, mas não espere que ele seja proativo em entrar em contato com você em relação à sua conta. Esta é mais uma linha de aconselhamento. Uma Consultoria de Gestão de Investimento, isso lhe dará a chance de conversar com um profissional para examinar todas as suas contas e ativos e formar um plano de investimento com suas orientações. Eles cobram por esse serviço, e se você tiver menos de 50 mil investidos, ele custará US $ 1.000, mais de US $ 50 mil será de US $ 250 e mais de US $ 500 mil com eles, é gratuito. Uma conta gerenciada & # 8211; este é o nível mais alto de serviço deles, onde você basicamente entrega o controle da conta para a Vanguard e eles alocam de acordo, eu tentei aprender mais sobre isso com o Concierge, mas ele estava um pouco confuso, ele mencionou que você pode ter que abrir mão controle da conta por um ano, pelo menos, para deixar esses caras executá-lo. Pessoalmente isso me deixa um pouco desconfortável. As taxas para o serviço são de 0,7% para o primeiro milhão, 0,35% para o segundo milhão e 0,2% para valores acima. Francamente, isso é muito alto para mim agora que empresas como a Betterment estão oferecendo esse serviço por metade dessas taxas.

4. Vanguard Blocks Fund Re-entrada por 60 dias.

A fim de manter os custos baixos, o Vanguard desestimula os investimentos de fundo a fundo e, a fim de garantir que eles o prendam de um fundo por 60 dias após você fechar a posição. Então, se você está no Mercado de Ações Total, e entra em pânico e decide se transformar em Obrigações, então você não pode voltar para o Fundo de Mercado de Ações Total para o período de 60 dias, após o qual você pode. Vale a pena notar que você sempre pode sair e vender qualquer posição, mas eles o restringem a pular de volta, a fim de desencorajá-lo a pular para fora. Além disso, a Vanguard agora oferece muitos fundos que são muito semelhantes por natureza, e também ETFs que são muito semelhantes e não têm essa restrição. Embora isto possa parecer negativo, a restrição é realmente útil para você se você planeja a Colheita de Perda de Capital em uma Conta Tributável, já que você precisa ficar fora do mesmo fundo por 61 dias para estar seguro & # 8211; leia mais sobre isso aqui Capital Loss Harvesting for the Index Investor.

Apesar de algumas coisas peculiares, como mencionado acima, eu acho que a Vanguard é o melhor lugar para colocar seu dinheiro, se você está bem com rebalanceamento e alocação de ativos (para mais sobre este assunto, consulte este post: Reequilíbrio de carteira para investidores passivos.

Sempre que você começar a configurar novas contas, recomendo usar um Analisador de Portfólio para verificar sua alocação atual para garantir que você não está pagando taxas excessivas por quaisquer outros fundos herdados que possa estar retendo e para garantir que esteja equilibrado devidamente. Aqui está uma revisão da ferramenta do Personal Capital que faz um trabalho fantástico com isso, # 8211; você deve dar uma olhada, mesmo que você não esteja pronto para abrir algo novo agora, já que ele lhe dará um instantâneo de todas as suas contas com facilidade, aqui está minha resenha do produto deles:

Capital pessoal poderosa ferramenta gratuita para examinar suas contas de investimento.

Compartilhar isso:

Hey Ed, desculpe, eu perdi este comentário. Comerciantes ativos significa pessoas que freqüentemente compram e vendem posições. Muitos desses comerciantes de swing vão comprar as mesmas ações, como a Ford, comprá-la e vendê-la quando achar que a hora é certa. A Vanguard acredita em investimentos passivos, que não afetam o comércio ao longo do tempo.

Ótimo post obrigado. Começou o processo de candidatura e parece que eles exigem que você selecione pelo menos um fundo antes que você possa abrir a conta de corretagem para operações etf etc .. Eu assumo um dos seus fundos de 1000 dólares (fundo estrela, data de aposentadoria alvo etc.) ser suficiente. Então, para aqueles com menos de 1000 dólares para começar seu roth, parece que a Vanguard não vai funcionar. Se eu estiver incorreto, por favor me avise 🙂 Obrigado novamente.

Você está correto, US $ 1.000 para a Data-Alvo ou Fundos Star e US $ 3.000 para abrir um Mercado Monetário que permita o acesso às contas da Corretora. Eu vou escrever um post de acompanhamento para pessoas com menos do que isso para investir.

Aguarde pela sua postagem. O mínimo de US $ 3.000 para o mercado monetário exigido para contas de corretagem é, na verdade, apenas para novos clientes da Vanguard. Foi-me dito isso por um representante da Vanguard quando eu falei sobre a aparente disparidade entre sua terceira e quarta captura de tela. Consegui abrir contas Roth na Vanguard com um total de US $ 1.000 com um Fundo de Aposentadoria do Meta e seu serviço de corretagem da VBS. Fiz isso seguindo as instruções acima e selecionando apenas o & # 8220; Vanguard Funds & # 8221; opção no passo dois. Então, uma vez que o relacionamento com o cliente tenha sido totalmente estabelecido (fundos transferidos etc), eu adicionei uma segunda conta Roth sob o mesmo login com a conta de corretora & # 8220; & # 8221; apenas (nota: não vi opção de adicionar VBS à conta Roth on-line existente. Pelo que entendi, uma segunda conta Roth é necessária devido à estruturação da VBS como uma entidade separada da empresa de fundos mútuos). Fiz com sucesso negociações de ETF na conta de corretagem para suplementar o Target Retirement Fund. Ainda não transferi dinheiro entre as contas. Eu também tive que adicionar manualmente a opção de entrega eletrônica para a conta VBS. Em conclusão, você pode estabelecer um Vanguard Roth com acesso a seus fundos mútuos e ETFs com tão pouco quanto $ 1000.

Ah, eu vejo excelentes notícias! A disparidade neste post vem do fato de que eu abri duas contas aqui, uma para mim e escolhi minha alocação de ativos no momento da abertura, e uma para a esposa. Eu queria sentar com ela e fazer com que ela escolhesse suas próprias alocações, então coloquei $ 5K no Money Market para ela.

A coisa boa com a conta da Corretora é que você pode negociar esses taxa de ETFs Vanguard livre, para que eles permitam o acesso a um nível anterior para os investidores com carteiras menores. Além disso, suas taxas de administração são muito próximas de seus fundos de nível mais alto, que normalmente exigem US $ 10 mil para entrar.

Parabéns! Eu também estou planejando abrir um Roth IRA com a Vanguard e transferir um Roth ASAP existente de outro custodiante cujas opções de investimento e taxas deixam muito a desejar.

Outro argumento contra o comércio ativo em um IRA de investimentos não-Vanguard é que (de acordo com uma discussão telefônica com Chris Goudy na Vanguard há alguns minutos), quaisquer taxas de transação de corretagem são deduzidas desses preciosos e limitados ativos do IRA. Você não pode ser cobrado por eles separadamente. É melhor, nesse aspecto, manter as suas decisões originais, desde que elas façam sentido. Fundos mútuos de vanguarda e ETFs podem ser automaticamente reinvestidos (você também pode direcionar dividendos para a conta de mercado monetário associada da IRA para realocação se você escolher). Ainda não tenho certeza sobre os outros. Mesmo se eles inerentemente oferecerem um plano de reinvestimento, verifique com a Vanguard em vez de assumir que você será capaz de usá-la.

Se e quando você tiver mais investimentos em uma conta tributável e estiver olhando para o quadro geral, muitos aconselham manter tantos de seus títulos tributáveis, e outros produtores de renda relativamente alta, em seu Roth quanto possível, para evitar rendimentos ordinários tributáveis. Os retornos sobre ganhos de capital de longo prazo são tributados a uma taxa mais baixa, de modo que o benefício de tê-los em um IRA é menor. Você pode eventualmente chegar ao ponto em que fundos como Wellington no IRA, que compreendem ações e títulos, não são mais a escolha ideal.

Alguns ótimos pontos aqui & # 8211; certamente manter qualquer coisa que não seja inerentemente com vantagem fiscal (como Munis) em uma conta protegida de impostos, como ROTH ou IRA tradicional, para proteger seus ganhos.

Isso foi muito útil, obrigado! Não foi possível encontrar mais nada atualizado!

Obrigado Cathy, feliz que ajude. Avise-me se tiver outras dúvidas sobre a conta com a qual posso ajudar.

Eu acho que para aqueles que querem negociar ativamente, uma conta de corretagem dedicada seria melhor porque eles têm melhores taxas (ou seja, OptionsHouse, TradeKing). A Love Vanguard, porque é muito fácil ver o índice de despesas, diferentemente de outras empresas, onde é difícil localizar essas informações. Também o seu & # 8220; Price & amp; Performance & # 8221; A aba permite que você veja facilmente como um determinado fundo se compara a vários benchmarks (por exemplo, S & amp; P 500, DJIA, etc).

Sim, eu tenho contas com OptionHouse também, e seria melhor para os operadores ativos, embora a maioria das pessoas não negocie ativamente em suas contas de aposentadoria, não que isso seja necessariamente errado, desde que você saiba o que está fazendo.

O mínimo inicial de 3000 dólares para abrir uma conta conta para o valor máximo que você pode colocar em uma conta Roth?

Sim. É o IRS que define o valor que você pode financiar um IRA Roth em qualquer ano ($ 5500 para 2013) e se você alocou $ 3000 em um IRA Vanguard Roth, então você teria apenas $ 2.500 para alocar.

Em teoria, você poderia colocar esse saldo de $ 2500 em um corretor diferente, EG Fidelity, mas isso seria um pouco confuso e no total você não poderia colocar mais de $ 5500 ($ 6500 se tiver 50 ou mais) a menos que você estavam pegando o dinheiro de um IRA tradicional e convertendo-o. Há uma maneira de fazer isso que esquematizo aqui saverocity / finance / convertting-to-a-roth-ira-using-partial-transfers-to-reduce-tax - custos /

Minha experiência com a Vanguard com uma IRA herdada foi a pior que já experimentei em mais de 20 anos como investidora privada.

O que deveria ter sido uma simples transação acabou como uma queixa formal de conformidade, uma queixa ao procurador-geral do estado de PENN e meu advogado pronto.

A equipe de transição da vanguarda & # 8220; & # 8221; Era como lidar com um monte de estudantes do ensino médio.

Felizmente, eu documentei todas as ligações e elas estavam gravadas.

Você pensaria que eles teriam desfrutado de uma nova conta de seis dígitos. Isso foi "Kafka abre um IRA herdado com o Vanguard". # 8221;

Soa áspero. Para ser franco, a vanguarda é tão boa e tão ruim quanto qualquer outra empresa, eles têm o nome no mercado baseado em taxas mais baixas e inovação Bogles do fundo Index, mas eles são uma empresa como qualquer outra, o que pode significar problemas quando você está lidar com algo como você fez.

Eu sei que você chama isso de simples, mas ativos herdados podem ser complexos, simplesmente devido às complicações que podem surgir quando alguém se atrapalha. Espero que você tenha tudo endireitado agora.

Parece que você teve uma experiência ruim como eu estou tendo com um rollover de um 401k Vanguard devido a um divórcio. Além de ser trabalhoso e demorado, mesmo quando você preenche os espaços em branco exatamente como eles pedem no QDRO, muitos dos agentes são simplesmente grosseiros. Eles realmente não parecem dar uma porcaria se você mantiver seu dinheiro com eles ou não. Eu planejei apenas manter os fundos na Vanguard e transferir minha parte do 401k para um IRA, mas estou seriamente reconsiderando que, depois da inépcia, o arrastamento de pé e a falta de atendimento ao cliente que eu encontrei .

Eu também estou tendo uma dificuldade considerável para obter fundos transferidos do meu.

ex Vanguard IRA para a minha conta IRA Vanguard. Vanguarda tem todo o.

papelada que foi pedido no seu "kit de divórcio", & # 8221; mas tem sido quase um.

mês e eu não consigo obter nenhuma informação deles, porque a sua vinda de.

minha conta ex. Alguma dica de como você conseguiu concluir sua transferência, Amy?

Muito surpreso ao encontrar tantas críticas positivas. Passei 20 minutos tentando alcançar o representante do cliente humano, que nem sequer entende o que significa rollover 401k & # 8230; Eu imediatamente mudei para tiaa cref. Estou muito feliz por ter feito uma boa escolha.

Vanguard O atendimento ao cliente é ruim.

Péssimo atendimento ao cliente.

Vejo que você abriu duas contas separadas de US $ 5 mil para você e sua esposa. Isso é permitido para o ano fiscal de 2013 se o depósito for em conjunto com duas famílias de renda e renda combinada abaixo de 181K? THX!

Eu também vou abrir um roth com vanguarda - esta é uma opção melhor do que uma tradicional? e fiquei dividido entre os fundos-alvo e o fundo-estrela, o que você recomendaria? Obrigado!

Oi Rich, para o tradicional vs roth que depende da sua renda atual, se você for tradicional, então você reduz seus impostos para este ano, mas adia-os para quando você distribuir os fundos em aposentadoria & # 8211; com um Roth você não recebe um reembolso agora, mas o dinheiro cresce totalmente livre de impostos.

Você acabou de perder o prazo para 2013, então você tem pouco menos de um ano para decidir qual é o melhor para as contribuições de 2014.

Ei Matt Muito útil write-up para iniciantes confusos como eu e há muito de nós lá fora. Eu estava no mesmo dilema há apenas um mês, então queria compartilhar minha experiência também.

2013 foi meu primeiro IRA. Eu tenho uma conta 401k 5 anos de idade, então eu decidi ir o caminho Roth IRA, para diversificar um pouco minha responsabilidade fiscal futura. Não foi possível iniciar um portfólio bem diversificado com a Vanguard. Então, ao invés de investir em um único fundo ou economizar em uma holding do mercado financeiro, decidi abrir um IRA de Roth com a Wealthfront. Como meu portfólio está abaixo de US $ 10 mil, eu não pago nenhuma taxa de administração. Sem taxas de negociação ou taxa de saída, realmente um grande negócio para um pequeno poupador como eu. Eles investiram toda a minha contribuição em 7 ETFs de baixo custo, o que eu não poderia ter conseguido com a Vanguard ou mesmo com outras casas como a Fidelity ou a TD. Em menos de um mês, o valor da minha conta é de até 2% (não realizado, claro). O que eu não gosto sobre Wealthfront é que você não pode controlar diretamente o que e quanto você investe (é otimizado e automatizado com base em sua pontuação de risco, e funciona para muitas pessoas). Eu quero o meu Roth IRA para completar o meu 401k, então eu poderia mover o meu IRA para a Vanguard ou um corretor de desconto como Options House no futuro.

Vou escrever uma resenha da Wealthfront em breve. Seu valor real aparece quando eles implementam a coleta de perda de impostos (que não se aplica a IRAs) para tamanhos de contas superiores a US $ 100.000.

Você não está em má forma alguma com eles com um tamanho de conta que você tem, embora eu note que você pode negociar ETFs com a Vanguard sem nenhuma taxa (se eles estiverem dentro da família Vanguard de ETFs)

A configuração pode ser boa, mas a transferência do plano qualificado da Vanguard para outro plano qualificado provou ser quase impossível.

Eu sinto sua dor. Eles me levantaram por 6 meses.

A sua revisão do Vanguard Index Funds foi útil, mas sou muito imatura neste campo e não compreendo tudo muito bem. Tenho 66 anos e vou me aposentar por 1-2 anos. Eu ficarei bem com minha renda por vários anos após a aposentadoria. Quando me aposentei, tive que transferir uma conta 401K para o tradicional ou ROTH IRA. Qual você recomendaria? Obrigado!

Estou com medo de não poder lhe dizer - há muitos fatores a serem considerados "# 8230; Se você pesquisar no site por IRAs e Roth, isso pode ajudá-lo.

Quando a Vanguard cobra 0,70% pelo gerenciamento. Quando você diz que o Betterment cobra metade disso, isso é enganoso, já que a acusação deles é de reequilibrar. Não é gestão. Esta é uma comparação entre maçãs e laranjas.

Não tenho certeza se concordo com isso. Você pode explicar o que você recebe da gerência da Vanguard? Eu imagino que seja alocação de ativos, com rebalanceamento. Qual é o mesmo que Melhoramento.

Eu não vejo nem como consultor financeiro & # 8211; mas estou errado? A Vanguard oferecerá conselhos sobre como pagar sua hipoteca ao comprar um fundo ou falar sobre o planejamento da faculdade?

Eu estou pronto para estar errado, mas eu acho que eles são praticamente a mesma coisa aqui.

Você tem um email ou qualquer coisa que eu possa entrar em contato com você? Eu tenho algumas perguntas sobre a Vanguard que eu gostaria de perguntar se você não se importa em respondê-las, é claro. Obrigado!

Na verdade, desconsidere & # 8230; vou apenas pedir-lhe aqui & # 8230;

Estou dividida entre escolher uma Roth IRA STAR com um nível de risco de 3 e Target Retirement Fund com um nível de risco de 4 & # 8230; o que seria recomendado para apenas colocar dinheiro fora e não olhar para tudo isso por alguns anos? E qual vai me fazer melhor retornar caso eu me aposente?

Difícil de prever o futuro, mas para lhe dar alguma compreensão - na aposentadoria a data prevista será de 65 títulos 35 ações contra o STAR sendo 65 ações 35 títulos.

Com o tempo, a estrela retornará mais, mas será mais arriscada a curto prazo, já que as ações flutuam mais que as obrigações.

Dependendo da sua idade, a Star pode ser melhor, mas, como regra geral, os fundos da data-alvo tendem a funcionar bem, especialmente quando se procura poupar nos próximos anos.

Tenho 30 anos e quero abrir meu primeiro Roth IRA. Eu só preciso de um 1000 para começar certo? você acha que a vanguarda é a melhor opção para mim? Eu quero contribuir com 5000 por ano. Eu sou muito imaturo neste campo 🙁 eu preciso de ajuda!

Me perdoe por pular antes que Matt tivesse uma chance - Eu me identifico totalmente com a sua situação porque eu estava lá apenas alguns anos atrás. Abrir uma conta com a Vanguard não era uma opção para mim porque exigiam um investimento mínimo de US $ 3.000 em cada fundo & # 8230; o que não me teria um diversificado & # 8221; portfólio. Então eu fiz, o que eu percebi foi a próxima melhor coisa que eu pude & # 8212; Eu abri uma conta com Wealthfront. Eles precisam de um mínimo de US $ 5.000, o que é tudo o que eu tinha na época, e isso me deu um portfólio diversificado (bem equilibrado). Se você quiser começar com um $ 1000, eu recomendaria o Betterment (eles não têm um mínimo), que é muito similar ao Wealthfront com pequenas diferenças & # 8212; A Wealthfront não possui taxas de gerenciamento de conta para contas & lt; $ 10.000, Betterment cobra 0.35% (por & lt; $ 10.000 e taxas mais baixas à medida que sua conta cresce) e requer um depósito automático de pelo menos $ 100 por mês. Se você não pode fazer isso, eu recomendaria Wisebanyan para você & # 8212; eles não têm mínimos nem taxas de gerenciamento de conta ou transação. Eles cobram apenas as taxas ETF / fundo que você pagará, independentemente de qual corretora você escolher. Eles são melhores para quem está começando, na minha opinião, e a única pegadinha é ... # 8212; você tem que entrar em uma lista de espera. Mas eu posso ajudar com isso. Se você me enviar seu endereço de e-mail, posso enviar um convite para você chegar à frente dessa fila. (Eu recebo algum tipo de "benefício de referência", não sei o que é isso, nunca convidou ninguém ainda). Eu não trabalho para nenhum dos serviços que mencionei & # 8212; Eu tenho contas com Wealthfront e Wisebanyan. Então, não há realmente nada disso para mim, se você está se perguntando.

Bem-vindo ao mundo do investimento responsável & # 8212; você está indo na direção certa. Ah, e boas festas

Este é um bom conselho também, embora com apenas US $ 1k começando o alfa dessas empresas não é realmente perceptível.

A vanguarda é ótima. Se você tem investimentos nonotrr, então você poderia olhar para um fundo de aposentadoria de data-alvo, que você vai começar.

Então, eu estou apenas começando um Vanguard Roth IRA. Eu ia transferir 1000 $. Eu estou com 29 anos e me aposento pelo meu trabalho, mas só queria ter uma conta separada. Alguma recomendação? Eu não tenho experiência neste campo. Eu recebo a taxa de $ 20, mas quais são os outros encargos? Eu realmente não quero colocar dinheiro quando não tenho certeza de nada.

Mark Beutler diz.

Eu abri uma série de contas com o Vanguard & # 8211; A vanguarda tem bons produtos e um bom site. Também tem uma burocracia horrível. Eu tentei mover um IRA de outra casa de investimento. Este é o dia 59 e eles ainda não conseguiram executar aquela manobra aparentemente simples. As pessoas ao telefone realmente não sabem o que está acontecendo com seu dinheiro. Se você usá-los, você tem que ver tudo o que eles fazem porque estragam tudo.

Eu absolutamente segundo isso. Meus filhos adultos herdaram um IRA de sua avó e, depois de três meses, ainda não tenho certeza se a Vanguard preparou as contas, embora eu saiba que eles receberam a transferência do outro zelador. Passei mais de cinco horas ao telefone com eles tentando obter informações sobre quais formulários preencher; a informação dada por três representantes diferentes revelou-se errada. Meu filho foi enviado uma carta dizendo que sua conta foi criada, mas agora (após o fato), ele mais uma vez tem que confirmar sua identidade & # 8221; para acessar informações sobre ele. Eu nunca experimentei essa inépcia com qualquer outra empresa e fiquei espantado por eles saírem impunes.

Don Johnson diz.

e a pior parte é que seu dinheiro não está funcionando para você por 60 dias. Eu não entendo neste dia e idade que eles afirmam que eles têm que esperar 5 dias a partir de uma transferência de outro corretor para & # 8220; claro & # 8221; antes de você ter acesso aos fundos. Você sabe que não há verificação de papel envolvida.

Sim, não é ideal no seu exemplo & # 8230; A chave pode ser investir em uma maneira Bogleheads dentro VG - em que você don 't trade regularmente e se você está rebalancing você nunca deve precisar ir para dinheiro.

Don Johnson diz.

Um dos meus problemas com a Vanguard é que não há lugar para você "estacionar"; o teu dinheiro. Você mencionou que transferiu dinheiro para o fundo do mercado monetário e depois comprou outra coisa. Mas o fundo do mercado monetário também tem o período de bloqueio de 60 dias de quando vender. Eu também gostaria de transferir US $ 500 / mês e quando eu atingir US $ 3K comprar um novo fundo. Não há onde eu possa transferir isso "pouco" # 8221; dinheiro. Tudo o que eu realmente consegui fazer foi transferir para um fundo que eu já possuía, e então, quando tiver $ 3K, compre um novo fundo. Mas então isso me tira do antigo fundo por 60 dias. Eu entendo a regra dos 60 dias, mas deve haver algum lugar onde eu possa estacionar dinheiro na minha conta de fundos mútuos sem pular nos aros.

Comentários de Per Gabrielle (23 de dezembro de 2014 às 18h06); Estou na mesma situação em que tenho apenas $ 1000 para começar e a possibilidade de adicionar um mínimo de $ 5000 no ano; Você pode me avisar se a abertura de uma conta com a Vanguard (start $ 1000) é recomendável e se é, então qual Fundo será ou na lista uma boa opção que você recomenda ?. Eu tenho 49 anos a propósito.

Muito obrigado.

Eu certamente recomendo começar logo que puder, já que tem muito mais tempo para crescer. É difícil dizer que fundo exato recomendar sem saber o que mais você tem, e quais seriam seus objetivos e tolerância a riscos. No entanto, gostaria de sugerir que um fundo de aposentadoria de data prevista pode ser mais fácil para você.

Há um monte de fundos na Vanguard, chamados de data-alvo 2030, 2035,2040 etc & # 8230; Se você planeja se aposentar em 2030, essa é a sua data prevista e equilibra um mix de ações e títulos para você. Você pode comprar por $ 1000. Note que quanto menor o tempo de aposentadoria, menos ações e mais títulos / dinheiro você verá. Isso porque pretende ser menos volátil na aposentadoria.

Se você é agressivo, pode escolher um fundo adicional, EG uma data prevista de 2050, que lhe dará mais posição de estoque, você ainda pode descontá-lo a qualquer momento .. a data é apenas para indicar o mix de investimentos e isn & # 8217; ta & # 8216; deve manter o investimento até esta data & # 8217 ;.

Espero que ajude um pouco.

Muito obrigado !, realmente gostei de seu conselho.

Sim, obrigado Al & amp; Matt: Eu também tenho 49 anos e estou tentando descobrir como investir. Então, se eu tiver 3k para investir, eu faço o fundo STAR para 1k e os outros 2k para um fundo alvo? Como faço para dividir o meu 3k que eu quero investir inicialmente?

Mais uma vez, quase impossível responder sem saber muito mais sobre você, mas eu apenas faria o fundo de data de destino. Note que ele pode perder valor assim como qualquer investimento.

A força é que ele contém uma mistura de ativos e, idealmente, se um cai (por exemplo, ações) o outro (por exemplo, títulos) pode reparar um pouco a perda. O fundo se reequilibra automaticamente em momentos como esse, mas ainda veria uma queda de curto prazo.

Obrigado pela resposta rápida. Por favor, perdoe-me sobre o seu comentário "você precisa saber mais sobre mim? & # 8221; & # 8230;. O que exatamente você precisa saber. Aqui está a informação básica & # 8230; Eu tenho um 401k com Fidelity para 40k e um plano de pensão do Estado quando eu me aposentar. Estou procurando o melhor cenário possível quando me aposentar. I know that rolling over my 401k to a Roth IRA is not the best choice (online calculators and etc, unless I’m doing it wrong). So my mix for retirement is the 401k plan, State Pension, Social Security (doubt that will exist in 2030) and the Roth IRA…best option for an Roth IRA if you were in my shoes at age 49?

Thanks again for your time, appreciate more than you know.

Well the questions you need to ask are:

How much money do you need from the Roth? If your pension is enough to cover your retirement needs then you could:

uma. Not need to risk anything in your Roth so go very conservative. (short term govt bonds)

b. Risk it all, because it doesn’t matter if the account drops as you don’t need the money. (all stocks)

The latter would mean 100% stocks and it could drop 30-50% in any year..

If you really DON’T need it then you can pick whatever you prefer from that.

If, however, your goals for retirement expenses are not met by your pension, what is the shortfall? That is a math question. How much do you need per month in retirement from this Roth?

You then take this monthly sum, say it is $200 and work out how much you need to save TODAY at what rate to achieve it. And you then fit an investment around those needs. If you don’t need 100% stock risk, don’t take it. But maybe you need more risk than short term Govt bonds.

That’s why it is hard to say specifically. You need your own numbers from your own expenses and future income. It can be done though, if you can figure out your retirement needs.

The target date option is the ‘safest’ in terms of suggestion as it has some risk from stocks and some stability from bonds and it balances itself. The weakness being that it is a little generic and we don’t know if it fits your own needs.

Hi, I am inheriting about $12,000 from my mom’s IRA which is in an Ivy Equity Fund with Merril Lynch. I’ve been reading about Vanguard Index Funds as good choices for IRAs since I am not an active investor. What would you recommend? In an inherited IRA, are you allowed to keep making monthly investments into it?

Index funds are great for keeping costs low, so would be a good idea. You also might want to look at Vanguards target date or lifestyle funds as they are low cost also (more expensive than a simple index, but still ‘cheap’.

You cannot contribute to the IRA, its a standalone account.

You can contribute to another IRA, inheriting one makes no impact on your ability to open another.

You must distribute the inherited IRA. You have 2 options: RMDs based on your age… IE it acts like you are already 70 1/2, but the amount of the RMD is based on your actual age. If you RMD this, you need the first payment distributed by Dec 31st after the year of her death. You need the IRS single life table for inherited IRAs for that. Alternatively, you can take a lump sum.

If it was a traditional IRA, the income is taxable under the rule of Income in Respect to the decedent. There is a deduction against this, but only if her estate paid estate taxes (only happens in larger estates).

If it was a Roth IRA and was opened for 5 years or more then the distributions are not taxable.

Hope that helped, let me know if you have other questions.

I am excited to find this discussion since I just open Roth IRA under my husband $5500 with $3000 going to vanguard index 500,$1000 to STAR And $1000 target retirement 2025 .

Matt , I hope this is a good idea and choice as far as what I choose above . I am new ! 🙂

I also opened another Roth under my name starting at $1000 and bought target 2035 and planning to deposit another $3000 in few days . I am trying to maximize $11k yearly contribution.

What do you think about the choices I made ?😁😁😁

Congrats on the new Roths! It’s hard to give detailed advice without knowing more about your situation, but if you have many years to retirement and are able to keep on contributing then you’ll likely be just fine.

Thanks for super quick respond . We are 32 yo so I will be happy if we can retire in 20years to 25 years max . My husband already have deferred compensation through his work however I want to maximize our investment vs stashing cash on saving account .

do you think I should stick to this 3 funds and keep putting more and more yearly to maximize it or mix it with other fund that offered by vanguard . Example index 500 min purchase $3k so in 2016 I should add another $3k toward it and so on next year after or should I buy new investment for Roth ?

You need to look at everything all together - including the deferred comp plan and decide upon a mix of stocks, bonds and others that you feel comfortable with. The index 500 will likely gain (and lose) more than the target date funds… It really comes down to how much risk you need and want overall to achieve your life goals.

I am 28 years old and this past year decided it was time to start saving more aggressively for retirement. I have no real experience in this field but I have a former classmate who works for Northwestern Mutual so I decided to open a Roth IRA through American Funds. I have made 7 contributions at $458 dollars each month so I can maximize the $5,500 allowed each year. It is in a 2050 target date retirement fund. I have noticed that I pay a sales charge of 5.75% each month which equates to about 26 dollars. Am I giving away money? After some research it seems to me I could start a Roth IRA with Vanguard or someone else and have my money work for me rather than giving a portion of it away and stunting my growth. Would I be able to transfer the money I’ve contributed over the past 7 months to another Roth IRA easily? I also have a 401K through my employer but I’m trying to save through other avenues as well. Any advice you could give me would be great. Desde já, obrigado.

Hi Eric, yes you are being robbed blind. Get out of that and into Vanguard!

You can rollover very easily, though you may get a fee from North Western to leave them too… I’d just get the hell away.

That’s what I thought, thanks for the advice I am calling Vanguard today.

I am 66, semi retired, married, with a $26,500 pension. I have a $700K traditional IRA and I am not contributing anymore; I expect to collect my Social Security when I turn 70. When I turn 70 1/2, I have the RMD to contend with. My plan is to take $12K a year from my traditional IRA starting this year till I turn 70, and invest $6500 in a Vanguard Roth Index, and use the rest for home improvement.

My purpose is first, to draw down my RMD and the taxes, and second, to open a ROTH for both my children in their mid 30s. All this income is mine alone and does not include my spouse’s. Would this be a wise plan?

Hi Lorraine, it’s hard to say unequivocally if this is a good plan or not due to lack of other data, but the idea to suspend social security Til 70 is a good way to increase it (though perhaps it might be worth taking a spousal payment until then). Also reducing your RMD and funding a Roth can be a good idea, but also, it requires looking at the tax brackets of you vs your children, again, likely to be a savvy move but times when it might not be.

Overall, I’d say ‘probably’ looking good, but worth looking into married jointly tax brackets, spouses income, Childs rates etc in order to be certain.

Hi, I have a Roth IRA target 2030 lifepath for retirement with State Farm and I’m getting hit with huge fees to actively manage my account I was told I should go with Vanguard target retirement so my money grows have approx 6,500 in this acct. what are your suggestions? Also any input on American funds would be appreciated also. Be getting raked over the coals for years and my own fault but clueless on this stuff. Obrigado.

Yeah, get to Vanguard asap.

Marvin Bowman says.

The objective merits of Vanguard and its products are well documented.

I will not keep more than a token amount of money at Vanguard however, because their customer service is inadequate. Their phone hours are far too limited outside of East Coast business hours.

Getting through to them during business hours recently has been beyond difficult. For example, after waiting an hour to speak to a person, that person transferred me to another department, where I just ended up in an interminable hold. What good is a brokerage that will not speak to its customers?

Harold Mongoue says.

Olá. I am a 20 year old college student who is looking to open up a Roth IRA and was wondering if you can recommend what company to go with and how to start the overall process. I know that the minimum amount allowed to be deposited is $5,500 for those under 65 and also that people with income higher than $131,000 cannot contribute. My concern is what will happen to the money that I would have begun depositing in a Roth IRA account once my income surpasses the minimum amount.

The min amount is $1. The max amount in a tax year is $5500 (under 65) you become ineligible on a sliding scale from $116k to 131k.

All it means is that if your income pops above the limits you can’t contribute to it in that tax year. Whatever is in the account is locked in and safe (other than the market movements of your investments) nothing happens to it if you later earn more. and if you later earn less (or limits rise) you can add another $1-5500 in each year.

Congratulations on the early start. I’m going to try to answer the part that Matt didn’t cover (perhaps because he doesn’t want to endorse any product/service? ;).

Unless you have good investing knowledge, I would recommend you start with a robo-advisor like Betterment or Wealthfront. My personal favorite is WiseBanyan. If you have some understanding of the markets, you could look at Motif Investing, a really interesting concept for trading.

Oh, sorry, I missed that part! Vanguard is fine. Robo advisors are ok, but their real value is in taxable, not tax advantaged 🙂

I currently have an traditional IRA with Vanguard, but am considering converting it to a Roth IRA. The balance is currently roughly $24k. Can I convert the entire balance after taxes or only up to a $5k limit? I look forward to your insight.

You can convert it all or part. Note that the amount you convert is included in taxable income so look carefully at your tax bracket and make sure you don’t convert at a high rate or one that pushes you up to the next income bracket.

Fantastic article, not only did I love your insight but I loved how helpful you have been with people who had comments/concerns. I have questions myself:

1) I am 22 and I just got my first full-time job. I make around $40K and my company offers a 6% match. My plan was to invest up to the point of the match into a Roth 401, and then max out a Roth IRA in either Vanguard or Scottrade (still debating which one, what do you think?). I want laid-back, passive accounts so I have been considering focusing both my future accounts in index funds. The problem is, I am not sure how to research and analyze the best index funds and I was wondering if you could steer me in the right direction? Mutual funds are very expensive, so would I be able to do indexes alone to get solid returns?

2) I understand a 401K has a $18K limit, so do you think investing up to my company match, and maxing out my Roth IRA is a poor move when I can strictly put it all in the 401? With that being said, I have student loan payments every month on top of both retirement accounts so I am trying to eliminate my debt while bolstering my retirement; so I was wondering your thoughts on that as well.

I am just a kid trying to self-educate himself, so your insight would be beyond helpful for me. Any sources, insights, information, and advice you could provide me with would be genuinely appreciated!

Sorry for the delay getting back to you. First, it’s kinda hard to give proper advice without knowing everything, but based on what I see here I’d look into the following:

Roth 401(k) vs Roth = It would depend on the funds your 401(k) has access to – if they are good ones, then I’d just keep it there. Typically, the 401(k) has stronger protections in terms of creditor, which makes it slightly better than an IRA (depending on your state).

The one edge here might be that you are able to get a HSA (not FSA) from your employer – I may be tempted to take that after the 6% match, assuming premiums are affordable, as it allows for even better perks than the Roth if you use that correctly. Vanguard vs Scottrade.. Probably Vanguard. At this point you don’t have a lot of assets so you want to avoid transaction fees (buying the ETF may or may not cost money at Scottrade)

Student Loans might be the most important thing of all… the Roth offers tax free growth and withdrawal, but that is dependant on actual performance – IE you could put $20K into a Roth, and it becomes $10K. The student loan is a guaranteed rate of return – whatever you pay off from that is interest saved. It’s like buying a bond that pays a rate far higher than anything you could get in this low interest environment.

The last thing to look at is at $40K is there anything that you might have access to by going Traditional. I know most people say “you’ll earn more later..” but if you look at things like the Trad 401(k) or IRA to manipulate your AGI into ‘poverty zones’ then you can open up more free money, example of this is the Savers credit: irs. gov/retirement-plans/plan-participant-employee/retirement-savings-contributions-savers-credit.

Hope that helps with some ideas!

Thank you for the reply! I have another URGENT question!!

I am actually meeting with the 401K guy at my company tomorrow. My last question is the following: if I have a high probability of leaving my company within the next 3 years (vesting period), should I just do 2 ROTH IRA’s instead so I don’t lose my company match? What do you think is the smartest move to be in a lower tax bracket / to save the most amount of money long term!

You’re a life saver,

Well a Roth won’t lower your bracket, so if that is the goal then the 401k will work to do that.

If you leave prior to vesting you don’t lose your own contributions, they are always vested, it is just the company side.

If you’re able to do a Traditional IRA based on income then that would work the same as the 401(k) in this case.

So overall, for my situation. should I just not do ROTH then? I prefer ROTH’s, but for tax purposes is traditional better? I guess I am foggy on how taxes work with both accounts. Like what would you say is the best move for my case.

Note: I also live in NY — incredibly high taxes.

I can’t tell you which is better from what I see here… but Traditional IRA and 401k lower taxes today (defer) whereas a Roth doesn’t impact today but grows tax free. Personally, I like to lower taxes when they are highest and receive taxable events when the bracket is lowest.

Thank you so much–

Just for a follow up I have decided to go with an Roth IRA, which I will max out for 2015 year before April. On top of that, I decided to go with a Traditional IRA with the company match, even though I will likely miss out on the match. Thought that would be the best approach. I should receive tax credits for the 8880 form you sent me with my AGI, so I thank you for showing me that as well. You’ve been more than helpful.

Hi I have 250k in Vanguard 2030 fund , also a 401k at work with no matching that I have 15% a week added to . It is with Wells Fargo in a Vanguard 2030 fund ! Wondering if I should lower my % to 401k and add more to my IRA ? I have 10 years till age 62 , what would be best Please ! Obrigado.

What’s The Best Broker To Start My Roth IRA?

I am often asked where is the best place to open one’s first IRA. Usually it’s a Roth IRA, since people tend to start out in lower tax brackets and Roth IRA save you taxes upon withdrawal. But to be sure whether you want a Roth or Traditional IRA, check out a quick IRA comparison tool over at Mint. You’ll be able figure out what kind of IRA you want, and then locate a broker to get it started.

Choosing a one’s broker is still a very personal decision so I don’t think there is one single best broker for everyone, but here are the ones I would recommend to my friends and family, so I would also recommend them to anyone. First, some assumptions:

You want to invest in low-cost funds or ETFs. Not every believe in this style of investing, but I do. If you wish to trades stocks all day or chase 5-star Morningstar funds, then my suggestions might not be the best fit fo you. You want low commission costs and account fees. By this, I mean you want the basic services at a good price. I don’t pay attention to things like streaming quotes, advanced trading software, options contracts, or if the website has AJAX everywhere. You wish to be an independent investor. If you want to pay for guidance, I still recommend taking the time to learn some of the basics, but please find a good fee-only advisor. They’ll probably set you up with a institutional account in which they can trade for you. You are just starting out. So you have anywhere from just $50 a month to $5,000 to put into an IRA. You may be worried about minimum balance requirements, and aren’t eligible for most premium accounts.

These firms mainly trade their own mutual funds, which somewhat restricts investment choice. To generalize, mutual funds are better suited for people who wish to dollar-cost average and like simplicity.

Commissions : Free to trade Vanguard mutual funds, although there may be certain redemption fees. Account fees : No account fees with electronic statements. Otherwise they may apply. Minimum to start : Most index funds have a minimum opening balance of $3,000. The STAR fund (VGSTX) lets you start with $1,000. More information here. Vanguard is the place where I hold all of my Roth and Rollover IRA balances. They offer a wide variety of both active and passive products, but I use them exclusively for their index funds. I like their all-in-one retirement funds for new investors.

Commissions : Free to trade TRP mutual funds, although there may be certain redemption fees. Account fees : $10 fore each mutual fund with less than $5,000. Not sure if this is waived for AAB. Minimum to start : Most funds have a minimum opening balance of $1,000 for IRAs. However, if you enroll in their Automatic Asset Builder (AAB) program and can commit $50 every month, the minimum requirement is waived and you can start with nothing. More information here. T. Rowe Price has index funds, but their expense ratios about about 0.25% higher than at Vanguard. However, their active funds have relatively low-costs and lower turnover compared to other actively-managed funds. I like the combination of the $50/month plan and one of their all-in-one retirement funds for those with limited funds starting out, although I don’t have an account here.

In case you’re curious, I’m leaving out Fidelity because their index funds have $10,000 minimums, and their active funds are more expensive in general than T. Rowe Price. I also don’t like their all-in-one retirement funds very much, as they seem to contain a slew of mediocre funds.

There are lots of great ETFs out there now, including several from Vanguard, and having a stock brokerage account gives you great flexibility to buy any of them. However, you will be faced with potential per-trade commissions, so here are a few that have low fees. I have accounts with all of these firms.

Commissions : Free for the 1st 10 trades per month if you have $2,500 in total account equity (cash + value of stocks). Otherwise, $4.50 per trade. Both limit and market. Account fees : $30 annual IRA fee. Minimum to start : No minimum balance to open. For more information, see my Zecco account review.

Commissions : $4.95 per trade, limit or market. Account fees : No annual IRA fee. Minimum to start : No minimum balance to open. For more information, see my TradeKing account review.

Sharebuilder (now owned by Capital One 360)

Commissions :$4 for each pre-scheduled “window” trade purchase. $9.95 for a real-time trade and to sell. Alternative higher-volume plans also available. In addition, if you open an IRA by 4/15/08 and use the promotion code ‘IRA2008’, you’ll get 7 free trades good until 12/31/08. Account fees : $25 annual fee if you are in their basic plan. If you are on a plan with a monthly charge, or you have any account on such a plan, this fee is waived. Minimum to start : No minimum balance to open. For more information, see my Capital One 360 ShareBuilder review.

I hope that helps people with their research. You should also be aware of IRA termination and transfer-out fees if you wish to move, but these change all the time so by the time you want to leave they may be different. For more related posts on starting out in investing, please see my Rough Guide To Investing.

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Comentários.

Last time I checked, the index funds available at Schwab were much more expensive than Vanguard. Their NTF funds are also expensive because the funds themselves have to pay to be included in their OneSource listing. This cost is usually passed onto the investor (check those 12b1 and other marketing fees in the expense ratio).

In addition, their ETF commissions are $12.95 per trade. All in all, Schwab would not be too appealing to me…

Question: do you think it’s a bad idea to just walk into your bank and say, “Oi, tell me about your rollover IRAs!”?

You could try, but they probably will either be more expensive or only be limited to cash products like certificates of deposits. I wouldn’t put my IRA in cash, as I am investing for the long term.

Why didn’t you add Fidelity?

Vanguaqrd STAR is a good balanced fund.

I think that banks serving retail clients are expensive for any kind of stock or mutual fund investing.

Correction to T Rowe Price with who I have majority of my holdings with. They do have index funds. They have a total stock market, 500, intl and extended index. Note, their expense ratio is little more than Vanguards.

“In case you’re curious, I’m leaving out Fidelity because their index funds have $10,000 minimums, and their active funds are more expensive”

Actually, fidelity is easier to get started with than vanguard with their 3k minimum. The target date funds (and I suspect index funds and other funds, though not positive) have minimums, but they waive the minimum (or it is really low, like $250) as long as you commit to auto deposits each month. Simple, no fees… But now that i have 5k, i’m moving to vanguard 🙂

I’ve had ameritrade for years. no fees or min balances and you pretty much get everything out there but its 9.99 a transaction….I don’t trade much so it’s no big deal to me…

I use thinkorswim for my IRA’s. They have no fees and you get 3 free mutual fund trades per month. Right now I just own Vanguard funds, but if I wanted to, I could trade T Rowe Price funds or Dodge and Cox or Fidelity funds all at no cost, or stocks or options if I wanted to (stock trades are reasonable but not bottom dollar at $5-10 per trade). I went with them since it seemed like the ultimate in flexibility without any real downsides. Support has been good and they’ll pay Fedex next-day charges for any deposits (was useful when I rolled over a 401k to them, I didn’t have to chance the check in the US mail).

I’m curious if anyone has any thoughts on scottrade for a RothIRA account, under the same idea as here, a no-fuss date targetted retirement fund.

I took a look at Fidelity’s retirement 2030/35/40/etc. funds earlier this month and totally agree with Jonathan’s assessment. They have a high expense ratio – around .85% – and seem to be a large collection of primarily actively-managed funds that overlap at random without offering much in the way of a coherent asset allocation strategy. Unfortunately my 401k is with Fidelity, and we have limited fund choices, so I have designed my own asset allocation strategy out of available funds. The average expense ratio is approximately .2% on those index funds – so much better than .85%!

Question for Jonathan/the group: what are the best articles/posts you know of that provide a good, numbers-based rationale for low-cost index funds vs. high-cost actively-managed funds? I am firmly in the index fund camp, but I frequently discuss this with people who are fans of actively-managed funds, and I would love some better background information to pass along.

I’m pretty sure that Sharebuilder has an annual fee for its IRAs, unless you subscribe to one of its monthly programs.

I use USAA for my Roth IRA, and so far it’s going pretty well. Granted I’m not a big roller by any means, but I don’t have any complaints about them at all. Their website is super easy to navigate, especially when setting up auto. transfers, and their customer service is just as cool. I’m one of those people who ask a lot of questions, and they’re always pretty patient and helpful.

Oh, and most of their mutual funds have zero initial balance requirements if used as a Roth IRA.

Sharebuilder has a $25 annual fee for standard accounts.

I heard Vanguard quality is going bad. I read some news about it. I cannot remember from where. Any comments and thoughts?

Why no mention of TD Ameritrade?

Vic – I don’t understand – exactly what do you mean by Vanguard’s ‘quality’? Could you elaborate?

They’re almost exclusively low-cost index funds, which means their value more-or-less keeps pace with whichever index they track. Expenses & fees remain the lowest in the industry. I’m not sure what else you’d be looking at – the firm is pretty much been exactly the same as it’s been for the last 30 years.

I use vanguard and have been pretty satisfied with them and enjoy the low fees.

T. Rowe Price only has the possibility of a $30 if you open a Brokerage Roth IRA. If you want to invest in just their mutual funds, not outside securities like stocks, ETF’s, or other companies mutual funds, etc… the annual fee would be $10 per mutual fund in your IRA that has a balance under $5,000. You should probably just start out with one fund, like one of the all-in-one Retirement Funds that Jonathan mentioned. This way, you will only get charged $10 per year until you reach $5,000 in that fund. Another good all-in-one fund is called Spectrum Growth. For clarification, T. Rowe Price does do index funds. They have about 3 or 4 of them, but the expense ratios, while low, are not as low as Vangaurd’s or Fidelity’s.

Let’s say you have a roth at vanguard. Does it make any difference fee-wise if you make deposits monthly or quarterly into a target retirement? I’m gonna start an IRA soon but I’m a little confused about how to figure out fund fees. Besides the brokerages having a per/year fee for having an account in general, how do you find the fees associated with whatever funds you want to invest in within the IRA. I just want to be absolute sure about not paying unnecessary fees…maybe that would be a good topic for a separate post – analyzing fees and guarding against hidden fees.

Fidelity has lower minimums for retirement accounts ($1,000, $2,500, $3,000) and, as previously mentioned, no minimums with the automatic investment program.

I’d probably use Vanguard if I could, but since I work for a securities firm, the firm needs to keep tabs on all of my tradeable securities. The firm has a deal with Fidelity; otherwise I’d have to use my firm’s brokerage for my IRA, with no access to low-cost mutual funds. So I’m not rah rah Fidelity, but considering I have no options here – Fidelity isn’t so bad.

If you open a traditional Vanguard brokerage IRA account (much like you would with Fidelity, TRowe Price, Schwab, etc) they do have an annual fee of $30 which is not waived unless you have a large balance with them.

Of course, it is possible to invest directly in the different Vanguard funds and have those fees waived with electronic statements, but it not the same as having a traditional IRA brokerage account, that holds all your mutual funds, and other investments together in one account, with a linked money fund to hold uninvested cash.

Just a thought here: So $30/year is enough to deter you opening an account with Vanguard? And by large balance, do you mean like $10,000? We are talking about a lifelong retirement account, so hopefully we’ll pass that $10,000 mark very quickly.

You guys are right about Sharebuilder. If you have the basic account, and are not subscribed to any other plan with a monthly charge in any other account, you get charged $25 per year. Eu senti falta desta. Jeez, all over their site is “no minimums and no inactivity fees”.

I use Scottrade for my individual brokerage account as well as my Roth IRA. My Roth consists almost entirely of index-tracked ETF’s, which I usually invest in 1k chunks. As such, each trade is only $7 online, which is about as cheap as you’ll find. Scottrade has no load, no transaction fee mutual funds, but I’m not sure how diverse their offering is. Most of the mutual funds are subject to a $17 fee.

More info on fees here:

All in all, I love Scottrade because it’s cheap and basic, just what I need.

I must say, navigating TRP’s site looking for fee information is a pain.

For a mutual fund IRA account:

There are no annual IRA fees for mutual fund accounts with $5,000 or more, individuals with a total of $50,000 or more, or households with $100,000 or more invested with T. Rowe Price. A low $10 fee per year is charged for each IRA mutual fund account under $5,000. The fee helps offset costs for IRA record keeping, tax reporting, and account servicing.

But this is waived with AAB, or no?

For a brokerage IRA account:

Annual Account Maintenance Fee.

$30 fee $30 fee is waived for:

* T. Rowe Price customers who qualify for Preferred, Personal, or Enhanced Personal Services1.

* Brokerage accounts in which five or more commission-generating trades are executed over the previous 12-month period.

* Brokerage customers who hold $50,000 or more in T. Rowe Price mutual funds.

* Brokerage Advantage customers subject to the $40 cash management service fee (see below)

b-bo – The $30 annual fee is only for the regular (non-IRA) brokerage account. An IRA account only charges the annual fee if you don’t select electronic statements ($20 for any fund with a balance less than $10,000). If you do sign up for electronic statements, all you pay are the expense ratios (typically around 0.2%).

For example: suppose you open a 2007 IRA account with the $3,000 minimum balance. If you elect electronic statements only, you pay no annual fees; if you prefer paper statements, you would pay the $20 annual fee.

Now, suppose it’s April 14, and your no-good cousin pays you back the $7,000 he owes you. You decide to put it all into Vanguard to keep it simple: $1,000 as a 2007 IRA contribution, $5,000 as a 2008 IRA contribution, and put the remaining $1,000 into a new, non-IRA brokerage account.

The brokerage account automatically incurs a $30 annual fee for 2008.

The fees for the IRA account depend on how you invest. If you decided to buy a second fund, you’d pay a $40 annual fee ($20 for each account) for 2008. If instead you put all your contributions into the same fund ($9,000 balance), you’d pay $20 for the account.

Suppose the market jumps 20% in September, and your fund is now worth $10,800. For the first three quarters, your average balance was below the $10,000 minimum, so you’d still pay $5 each quarter. Assuming the market holds in the 4th quarter, you would no longer pay any fees on your IRA account, but would still be subject to the $30 annual fee on your brokerage account.

I pretty much agree with what people have said here. I have Fidelity through work for my 401k, and I have a huge selection of funds (

200). I like the fact that there is a large variety of indexes and actively managed funds. However, their Target funds are mainly actively managed, which I do not like.

I opened up my ROTH IRA at Vanguard because of their cheaper retirement index funds. If I’m plunking a decent amount of money down every year into a ROTH, I like the fact that it is going to be relatively well diversified – I can tweak my overall diversification strategy using my 401k.

Vanguard charges a $20 annual account service fee for each Vanguard fund in which you have a balance under $10,000 in an account.

Does this apply to Vanguard funds held in a non-Vanguard brokerage account?

I have T Rowe Price for my 403(b) at work. I did pay $10 the first August because my balance was less than $5000. I have very little good or bad to say. Everything seems to work fine; I have the retirement 2035 fund.

I’ve had my Roth IRA and Traditional IRA with TIAA CREF for about a decade. I found their fees to be reasonable, and I like the “rebalance on my birthday” característica. I’d be a bit wealthier if I’d understood why that was a good idea earlier.

I’m thinking of transferring at least one of my accounts away from them though. I’m tired of problems with the web site. My account has shown “phantom” contributions for over a year that I did not make, although all of my balances seem to be correct. I must not be the only person having problems. They recently sent a letter out that they are raising their fees because of the cost of running to accounting systems at the same time because their transition to a new one has gone so badly. Basically they hired it out to a company that botched the job, and not only does the system not work well enough to use, they’re charging me for it.

For my IRA this year I opened an account with Firstrade and purchased a Margaritaville portfolio in ETFs. There’s no fee for the IRA (about $30 at many other places). I can have my dividends reinvest throughout the year, with partial shares, so I stay fully invested. And with 3 trades a year to add new funds and rebalance, my trading fees will come to a reasonable $20.85.

The $20 fee is waived with electronic statements, or a few other ways. I don’t believe they are charged if you hold them in a non-Vanguard brokerage account.

There are several brokers like Scottrade, TD Ameritrade, E-Trade, and more out there who charge from $7-$15 per trade. But they all charge more than $5 per trade without adding anything substantially of value in my opinion.

If you’re already with them, you might have the inertia to stay. But if you’re looking for a new place to start, I can’t justify including them in my “top 3”. Por que pagar mais?

TradeKing is even offering to reimburse your transfer-out fees if you move your account to them, as long as the value is over $2,500.

ThinkOrSwim is interesting. I keep waiting for them to drop their free mutual fund trades though. Scottrade couldn’t keep free mutual fund trades from any fund family going. FirsTrade tried too, and couldn’t keep it going either. Limiting it to 3 per month seems to be working for now.

right now my roth ira is at vanguard in a target retirement fund. once i have sufficient balances to build my own asset allocation with their funds, i will move out of the target retirement fund.

overall their service, fees, website, and fund choices have been fabulous. as jonathan has said in other posts, vanguard is a company i could see myself staying with for decades (which is what i have until retirement).

i personally dont like the prospect of paying ANY sort of fees (beyond expense ratios) in an account that i can only add a finite amount of funds to annually. i started with td ameritrade, and once my free trades expired, i watched commissions just eat away at my balance. combine that with never being fully invested…. opening an account directly with the fund company you wish to invest in is the only way to run an ira in my book.

to follow on to my above post, i am currently shopping for a place to open a taxable brokerage account for ETFs first (for further diversification and tweaking my asset allocation), and later for an individual stock or two here and there… maybe an active managed fund if i really get a decent chunk of play money? (small % of total portfolio). so cheap to free trades would be ideal i think…

been looking @ scottrade… any thoughts/comments on them? i was never thrilled with td ameritrade and dont want to deal with etrade. schwab and the others in that range just get too expensive… although i have a schwab checking account.

thanks for the recommendations.

You may also try EverBank IRA and Roth IRA. Say, ISK 3 months CD gives 12% at the moment. You will lose 0.75% conversion exchange rate twice: USD to ISK, and back. The annual fee is $45.

after opening zecco acount and not funding it for 17 weeks, they offered me $100 to fund it with $2500 before March. Guess it paid to wait.

So…sharebuilder will charge me $25 for my 1/2 share of EEM? Guess the whole patient payoff bonus won’t be coming through on this one for us Jonathan. What’s the selling fee? 15? do’h!

ShareBuilder $25 annual fee is only for IRAs. Regular taxable account have no maintenance or inactivity fees, which I guess is what they talk about when they say “no fees!”

I still have my EEM and BRKB 🙂

The $10 Annual Fee at T. Rowe Price IS waived if you use Automatic Asset builder (AAB). I’ve had a mutual fund account with them for a few years. It took a while to get over $5,000 and I’ve never been charged a fee.

I recently cleaned out my account to pay off our car loan and started over at $50 per month into three mutual funds through AAB.

You pay tax on any withdrawals you make with a Roth IRA if you have not had more than 5 years elapsed since the creation of the Roth.

I’ll second thinkorswim. while I don’t have an IRA there I do have a brokerage account and really like their Java-based trading platform. even if you don’t actively trade, you’ll learn a lot about trading there. plus you can paper-trade to your heart’s content to help you learn the platform and basic trading strategy.

for non-IRA accounts you can trade pretty much anything: options, futures, forex. you can’t trade these in an IRA there, though some places allow it. frankly for your IRA you shouldn’t be looking at options and futures anyway; those are for your “I can afford to lose it all” conta. oh yeah: how do you make a small fortune trading futures? start with a large one!

I have my IRA with T Rowe Price. They do NOT waive the $10 IRA fee if you use Automatic Asset Builder. I paid the fee last year and I’m using AAB. Also they charge $10 a year to invest in their index funds. You need to have a $5000 balance to avoid the IRA fee. Not sure how much you need to avoid the index fee.

If you just want mutual funds, I found TIAA-CREF to be a good choice for low(ish) cost funds with no account fees even for small accounts. This was when I did my research into this topic 5 years ago – not sure if things have changed since then.

I agree with your mutual fund brokerage recommendations. I don’t really agree with your ETF/stock brokerage recommendations. With any kind of retirement acct, you kind of want the company to be around when you retire. Zecco, Tradeking, or any of those new companies most likely will not be around. Yeah, they might have cheaper commissions, but it’s not worth the hassle of moving from company to company as they go out of business. I think they’re suitable for playing around with stocks for short-term, but not for retirement.

Scottrade is a decent company to do business with, unfortunately they do not offer reinvestment of dividends. This has discouraged me from using them for Roth IRA purposes.

You missed the best of all – a Cayman Islands bank. No taxes or fees. Período.

Oh, does Credit Suisse also have a branch there?? I suspect with the NSA collecting and sharing all the wire , plane travel, travel traffic and the satellite comm traffic, the Cayman Islands are now a thing of the past for aspiring retirees at least for those who are Americans!

I agree that some of the brokerages have a higher chance of going under, but in general they will be bought out or merged. Mergers also aren’t really that disruptive. And you can’t predict this stuff:

BrownCo, which I thought was pretty solid, got bought by E-Trade.

E-Trade, which I also thought was pretty solid, got hammered by subprime losses.

Ameritrade and TD Waterhouse were big, but now they merged, and now might buy or merge with E-Trade.

In the end, I think trades are becoming pretty much a commodity. So I’m not willing to pay $20+ per trade in the meantime. Just my opinion.

Just curious as to why you didn’t list Fidelity…?

Never mind, I just read the bottom, sorry.

I have used Scottrade for 3 years. No fees at all and either $7 or $17 per trade depending on what fund you choose.

For smallish accounts, I think Vanguard is the best choice. You can get into a low-cost Target Retirement Fund for just $3000 and there are no account fees whatsoever if you choose e-delivery of statements. They also have a large stable of low-cost index and some above-average actively managed funds. The only caveat is that their trading commissions are expensive if you want to buy individual stocks. If you are trading stocks, I’d go with Scottrade or Zecco.

I have a Roth and traditional IRA both at Firstrade; yes, there are charges for mutual funds, but these accounts are pretty much all either ETFs or individual stocks. I like them a lot!

I have a number of old 401K accounts and a a couple other investment accounts with small amounts in them. I have a new roth IRA w/ ING (that I want to move) and about 15K in cash. I’m 31 and the 15K in cash is an emergency fund and some savings for an upcomming engagement. That being said the rest of my accounts are a mess and probably total about 20-25K. They are so spread out that I can’t keep track of them. I went to my local credit union and they have a finacial advisor who will work with you on these things for free. One of the first things she thinks I should do is open a Pershing account. I have never heard of this before. Is this a good idea and if so what questions should I ask and what types of fees should I look out for? After that I need to totaly reallicate my investments. I am considering some of the Vangaurd retirements funds, but other then that I’m not sure. Any help would be appreciated.

I’m starting my first Roth this year and I’m leaning towards a target retirement fund. I’m pretty conservative with my money and I don’t want a lot of hassle. Right now Most of my money is in CDs and T-Bills. I really just want to open the account and forget about it and just add money to it once a year. Do I have to be actively managing it or can I just leave it?

I want to open an IRA . My husband and I together make about $187k gross. He is eligible for his company’s 401k plan, but I am not eligible for mine. We plan on maxing out his 401k plan. My understanding is that because of our income, we are not eligible for a Roth IRA. Can you recommend a good broker for a traditional IRA? Since I’m in my late 20s and am relatively young, so I plan on choosing 100% stocks. I am absolutely clueless about personal finances. I just want to dump my money into an account and leave it. I don’t want to “actively manage” qualquer coisa. Obrigado.

Currently I use several small accounts. Thanks to this collection I ‘ll give tradeking a chance and maybe I shift all to one account.

I have a roth ira with ing that hold a few mutual funds. If i wanted to also invest in stock for my ira, would i have to open a separate ira altogether?

C & # 8211; If ING does not allow you to buy stocks, then yes.

I have been using scottrade for my roth ira. i buy mostly mutual funds and also a couple stocks. I have been very happy with everything. Lots of funds to choose from. Simple to purchase funds and to deposit money. Every time i call i am speaking with an actual person within seconds without having to listen to a bunch of options first. No annual fee and no fee to transfer the account out if i ever want to change. They dont allow dividend reinvestments on single stocks which i wish they would, but they do allow it on mutual funds. I would recommend scottrade for sure.

I have my ROTH IRA with Scottrade. It has low commissions and very good service. You will speak to an actual person within seconds. The only thing I don’t like is that the CD minimums are all at $10,000, which is a little HIGH for an investor just starting out. I am considering to goto Vanguard because of this. But I think I’ll stick with them for now.

How does this fall under the real estate tag?

I want to open up a self directed IRA but do not want the hassle of learning all the companies and ETF’s to trade.

Is it possible to permit someone trade in my account but not make any withdrawals.

I would pay them 5% a year of the performance that they increase my account. i. e. if my account was 20k Jan. 1 and on.

Dec 31 it was 30k I would send them a check for 500 dollars.

I would lay rules on stock price and volume traded before doing any of this and the authorization can be revoked with one phone call.

Does this sound like it is do able?

Have you thought about checking out one of the highly recommended financial advisors, for instance like Edelman Financial–I think they are fee based, have credentials and their fees may be quite a bit less than 5%, and they have a track record of success trading the accounts for their their clients, and take small accounts from those starting out. Per Barrons, they have won American best financial advisor awards status a number of years. I don’t use them because I do all my own trading, but if something happened that I was not able to continue that in the future, I would go that route.

can i invest in stocks for my T. Rowe Price account, or does it have to be just mutual funds. Isnt it best for younger people to invest more in stocks then mutual funds.

“I want to open up a self directed IRA but do not want the hassle of learning all the companies and ETF’s to trade.”

Danny: This doesn’t sound like a very good way to do it: and a lot of active traders underperform the indexes. IMHO, you’re better off learning a little about some basic ETFs and putting your money into those. Many people who call themselves experts underperform the indexes, too.

And a question for everyone: What do you think about Optionshouse? I’ve been with them for 6 months and they’ve been reliable for me. I don’t see any fees associated with IRAs, and their commissions are $4.

Thank you for posting such interesting article. Continue postando.

Trackbacks

[…] answers the question: What’s The Best Broker To Start My Roth IRA? We split our IRAs between T. Rowe Price and TD Ameritrade. I like both companies for their different […]

[…] though. They are alright, but at $10 per trade with potentially small balances, here are a few alternatives that I suggest exploring. Note that TD Ameritrade has a $75 fee for transferring out your account directly to another […]

[…] “What’s the Best Broker to Start My Roth IRA?” at My Money Blog. I don’t have a choice due to employer restrictions, but if you have a choice, this is a good read. [& # 8230;]

[…] What’s the best broker to start your IRA? [My Money Blog] I know I link to Jonathan a lot, but this is one of my favorite PF bloggers because he’s such an excellent resource. He brings the 411! [& # 8230;]

[…] credited directly into a Fidelity IRA. This is nice if you have a Fidelity IRA, although it is not one of my favorite places to start an IRA since their index funds have a $10,000 minimum and their stock trades aren’t that cheap. [& # 8230;]

[…] I wouldn’t trade there, though. Just take the bonus. For more value, here are the brokers that I would recommend for starting an IRA. [& # 8230;]

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Oi! Sou Jonathan e venho dividindo dinheiro desde 2004. Pai, investidor autodirigido, entusiasta da liberdade financeira e aprendiz perpétuo.

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TD Ameritrade is among the top-ranked online brokers, according to third party ratings by Barron’s and Kiplinger’s.

Stock trades aren’t the cheapest at TD Ameritrade (see our review here), but you get one of the industry’s top education and training platforms, and one of the top rated research platforms.

Add in no account minimums , no monthly maintenance fees , and the ability to make trades online, on your mobile phone, or at one of over 100 physical locations, and you have a winning combination.

For more information, or to open a TD Ameritrade account, visit tdameritrade/.

4. OptionsHouse.

Options House offers the lowest prices for a standard online stock trade out of the brokerages listed in this review.

A standard stock trade only costs $4.95 and options trades which are among the best in the industry (see OptionsHouse review for more details).

OptionsHouse was rated #1 by Barron’s in user experience.

This is a great brokerage for investors who are concerned with cost per trade. While options traders may be able to find a lower average cost based on their trading habits, OptionsHouse scores points for their user interface, software, and other features, making them a solid option for investors of all types.

OptionsHouse boasts no maintenance fees , no volume requirements , and no monthly minimums .

For more information or to open an account, visit: optionshouse.

5. Scottrade.

Scottrade has 25 years of experience and one of the best reputations in the brokerage industry.

The $7 trades are right in the middle of the price range out of these online brokers, but Scottrade is the only discount brokerage on this list featuring brick and mortar offices where you can visit a broker for face to face meetings.

No maintenance or inactivity fees, low stock trades, free online workshops, the Scottrade community, research and educational tools and tax tracking software make Scottrade a great fit for day traders and the casual investor alike.

Scottrade will reimburse new customers up to $100 to transfer their holdings to Scottrade. For more information, or to open a Scottrade account, visit the Scottrade website.

Scottrade has a promotion which will give you 50 commission-free trades for qualifying accounts. If you open an account and deposit $10,000 or more, then you can enjoy those fee free trades right away. Commission-free trades are an excellent way to maximize your investments.

6. Firstrade.

Founded in 1985, Firstrade has one of the longest legacies of the discount brokerage firms.

Firstrade gives stock traders and investors low commissions, low margin rates and a three second execution guarantee.

regular brokerage accounts retirement accounts Education Savings Accounts.

All of which come with no minimum initial deposit and no maintenance or inactivity fees .

Firstrade has access to over 10,000 mutual funds and offers new customers up to 100 free trades. The standard rate is $6.95 per trade, making them one of the lowest priced options out there.

7. OptionsXpress by Charles Schwab.

OptionsXpress has a flat fee of $8.95 per trade for all standard US based stock trades.

There is an Active Trader Rate for options which kicks in when you makes 35 or more option trades per quarter.

OptionsXpress has no inactivity or maintenance fees regardless of how much you have in your account, and does not charge for streaming quotes or standard withdrawals. O.

free webinars free trading tools free advanced research the option of a personal coaching program.

For a limited time, you can also get a $1o0 sign up bonus when you open a new account and fund it with a minimum of $500 and make a minimum of 3 trades in the first 12 months of enrollment.

8. Capital One Investing (formerly ShareBuilder)

Capital One Investing used to be known as ShareBuilder, which was part of the ING Direct brand which was purchased by Capital One in 2012, and rebranded as Capital One Investing. Capital One made a few important changes, many of which appear to bring their trading platform more in line with the competition.

Where ShareBuider was designed around low-cost automatic investments, Capital One Investing is a more traditional brokerage firm with low-cost real time trades, the ability to make options trades, and much more. You can invest with a small starting investment, as there are no minimum requirements to open an account, no inactivity fees , and no minimum trade requirements . Capital One Investing announced in January 2018 that they agreed to sell their brokerage firm to E*TRADE.

Capital One Investing also offers an educational and training center and a variety of premium features. To top it off, you can easily link your Capital One 360 account to make money transfers in or out fast and easy. For more information, or to open a an account, visit capitaloneinvesting.

Which Investment Firm is Best?

As you can see by the above comparison chart, there is a wide range of prices and features with these brokerages, which should cover just about anyone.

I recommend reading the section below to help you learn how to compare the different brokerages and determine which online discount brokerage is the best for your needs.

We also have a list of prominent IRA providers if you are considering opening an IRA.

How to Compare Online Brokers.

Not all online brokerages are created equal. Here are some of the major areas to consider when comparing online brokerages:

Commissions and Other Trading Related Expenses.

One of the first features many investors look at first is cost .

While lower is generally better, the overall cost per trade may not be the most important factor if you are not a frequent trader. Saving a $1 per trade on less than 10 trades per year won’t have a major impact on your bottom line.

On the other hand, day traders and other high-volume investors will want to look for the lowest commission per trade, and will also want to compare other expenses, discounts for high volume traders, etc.

Here are some of the different factors to consider when comparing commission costs between online brokerages:

Commissions for Market or Limit Trades Options Trades Automatic Investing or Reinvesting Cost of Buying No Load Mutual Funds ETF trade fees Cost of trading on margin.

Other common costs to compare:

Assisted Trades. Some brokerages charge extra if you need personal assistance when making a trade. Most platforms are easy enough to manage without this added feature, so you won’t need it or every trade. Just be sure to understand what the trading fee will be so you don’t have any surprises (and be sure to check with the broker’s online knowledge base or customer service before placing a broker assisted trade – you can usually handle most trades on your own).

Account Minimums & Taxas de inatividade. Some brokerages require customers to maintain a minimum balance to avoid fees, while others may charge customers for inactivity if they don’t make a certain number of trades within a set time frame. I am primarily a buy & hold investor, so my personal preference is to avoid brokerages that nickel and dime customers with these types of fees. Most discount brokerage firms don’t charge these fees, but be aware that some brokers do.

Differential Pricing for Commissions. Many brokerages charge a flat fee per trade, while others offer differential pricing. This is most common for accounts that maintain a certain minimum account balance, or for accounts that exceed a set number of trades per month, quarter, or year. For example, E*TRADE charges $6.95 per trade, or $4.95 when you make at least 30 trades per quarter.

Investment Availability.

Most brokerage firms allow investors to trade just about any stock held in the major US markets. But there are some different types of investments you may wish to trade that may or may not be available at every brokerage firm.

Good examples include certain mutual funds and ETFs. Here are some more factors to consider when comparing discount brokerages:

Mutual Fund and ETF Availability. Not all mutual funds and ETFs are available at all brokerages. Many of the major mutual fund and ETF families are widely available, but be sure to check with your brokerage before assuming you will have access to everything.

Dividend Reinvestment Plans. Many investors prefer to automatically reinvest their dividends so they can continue having their money work for them without having to think about it. However, not all brokerages make it easy to do this. If you want to automatically reinvest your dividends, then look for brokerage companies that offer free Dividend Reinvestment Plans (DRIPS). These plans allow investors to automatically reinvest their dividends without being charged another commission. Be sure to look for brokers that allow investors to purchase fractional shares of companies, otherwise you won’t be able to put your entire dividend to use.

Automatic Investment Plans. Some investors prefer to automatically invest the same amount of money each month in the same stock, bond, or mutual fund. This is very similar to investing in your 401k at work. This works best for investors who regularly have a little extra cash to invest each month. This feature allows investors to create their own investment schedule and stick to it. Look for n investment firm that doesn’t charge for this feature.

Ferramentas & amp; Serviços.

This is perhaps the most exciting area which separates the different online brokerages.

Many firms offer a variety of online tools and services, including educational and training resources, webinars, advanced stock filters and research tools, real time quotes, advanced analysis, cost-basis tracking for tax purposes, and much more.

Full Service, Banking, and Other Features. Some brokerage firms are willing to hold your hand, while others expect you to be able to handle everything more or less on your own. Some brokerages offer full-service banking. This can be convenient, as you can keep all your savings, checking, and investments under one roof.

Mobile Trading Platforms & Apps . Most brokerages now offer apps for your smartphone or tablet. Not everyone wants to trade on the go, but having that flexibility can help you avoid being trapped behind a desk and give you the ability to take advantage of market movements when you’re out and about.

Promotional Offers and Sign Up Bonuses.

The brokerage community is very competitive, and many brokerage firms are willing to give new customers some form of bonus for opening a new brokerage account.

Common promotions include:

Free stock trades – usually limited to a certain number or time frame, Cash bonus – often a flat rate for a new funded account, or a tiered bonuses based on the amount of the initial deposit Other bonus – I’ve seen promotional offers that include free iPads or Kindles, free GPS units, computers and computer monitors, and more. Transfer fee reimbursement – most brokerages charge an ACAT Transfer fee to transfer your assets out of their brokerage. ACAT transfer fee refunds are a popular sign up bonus because it removes a barrier to moving funds to a new brokerage.

Here are some brokerage coupon and promo codes which can get you some free trades or free bonus money when you open a new account:

Customer Service and User Reviews.

Don’t overlook customer service.

Many brokerage companies offer 24-7 customer service, while others may have more limited hours. You should also consider whether they offer phone support, chat, email, or other forms of service.

Individual reviews are also important. We do our best to review a variety of products and services on this website. But our use and needs may differ from yours. It’s generally a good idea to consider multiple sources.

And, if possible, give the brokerage a test drive before committing all your investments to their service. One way to do this is to see if the brokerage firm offers a “play” account, where you can open an account and make stock trades with play money while you learn how their platform operates. Many firms offer these types of accounts for free.

Another option is to open an account and test the waters before making actual live trades. Again, the purpose is to give yourself familiarity with the platform before moving the bulk of your investments to that company.

Choose Your Brokerage Base on Your Needs.

Investing is personal. And every investor may have different needs.

The high volume trader may value certain features or commission structures, while the buy and hold investor may prefer a brokerage that offers other features, such as full-service banking. The above feature lists should give you a good starting point to consider which features are important to you.

Use your personal feature list to narrow down your choice to the best option for your needs. All the mentioned brokerage firms on this page should also be a good starting point, as they all offer something unique.

Do You Have More Than One Brokerage Account?

Many investors have more than one brokerage account.

There can be good reasons for this, including specialized trading needs, taking advantage of lower trading costs, utilizing premium features or services through a different broker, avoiding the expense or time involved with consolidating accounts, or other reasons.

Having multiple trading accounts can have benefits, but it can also complicates your finances.

For example, it’s one more account to look at when calculating your net worth, one more set of investments to deal with when re-balancing your assets, more sets of tax forms, etc. I can’t help you with the taxes, but I can help you with the first two problems.

If you are dealing with multiple accounts, then it’s highly recommended to link your investment and other financial accounts to an account aggregator. These software programs will link all your assets to automatically show you your net worth and other valuable information. Some of them will even show you your asset allocation and make recommendations on how and where to rebalance your portfolio.

We have a list of some free online tools to help you do this. But I’ll skip to the punch line and just recommend the one I use – Personal Capital.

Personal Capital is free, easy to use, and will help you understand your total financial picture, including your net worth, asset allocation, how much you pay in fees, and where you can rebalance to get your portfolio in shape. It’s 100% online and uses bank-level security features to track your investments.

Finally, Ask Questions!

Information changes all the time, so even something in our data above could have updated. Feel free to let me know about those, too, so we can all benefit from the latest bonuses and stay on top any free trade offers.

If you have any questions, feel free to ask them in the comments below. Someone else may have the exact same question, so we can all benefit from the discussion.

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Sobre o Ryan Guina.

Ryan Guina é o fundador e editor da Cash Money Life. Ele é escritor, pequeno empresário e empresário. Ele serviu mais de 6 anos em serviço ativo na USAF e atualmente é membro da Guarda Aérea Nacional da IL. Ele também escreve sobre temas de dinheiro militar e benefícios militares e veteranos no The Military Wallet.

Great breakdown! When I have money to invest, I need to refer back to this to help me decide which online service to use. In the past I invested through Edward Jones, but I’m definitely going to bypass the middleman going forward.

I recommend brokerages like Interactive Brokers or ThinkOrSwim who charge far less per transaction and you can truly manage your portfolio.

I trade with TOS and get $1 equity trades, $1.25 options, $2.50 futures. They have an outstanding software platform you can download or you can manage it online like rest of the companies out there. In addition, you get an internet rebate with 40 trades, 3 free mutual fund trades if that’s your thing, they cover $100 ACAT fees if transferring, etc., etc.

I signed up with interactive brokers and they said they’re not running any promotions where they cover a ACAT fee.

frugalcpa: If you know what you are doing, you can save a lot of money by eliminating the middle man. A professional advisor can benefit you though, because they will know certain things you won’t – such as allocation, tax laws, different places to invest, etc.

Just be careful you don’t let them sell you something you don’t need! 😉

Brad: Thanks for the info. I have not had much exposure to TOS, which is why I did not mention them.

Am I missing something regarding the fees? You mentioned you pay $1 equity trades, but the TOS price sheet states that shares are $0.015 per share, with a $5 minimum, a $10 flat rate.

Per Share Commission*

$.015 per share ($5.00 minimum)

Flat Fee Trading**

$9.95 per trade (market or limit orders; 5,000 shares maximum)

There are other good benefits at TOS – the three free mutual fund trades per month is nice, as are a few other features.

I guess I’m just curious to hear more info.

Thanks for the comparisons. I just opened a Sharebuilder account for a $90 bonus through Costco. As I don’t really have any extra money to invest right now, I will most likely wait until TradeKing does some sort of bonus. The comparisons were very helpful though.

Thanks, Steve. From what I understand, TradeKing usually does a giveaway offer about once a year. They did it in October and November of last year, so it may be awhile before they do it again. but I agree with waiting. No need to open an account that you won’t use! 🙂

Why nobody talks about sogotrade? This is still the best website for only 3 dollars a trade/option. Sogotrade is not as good as tradeking, but it’s better than zecco. OK! zecco’s used to have a good interface, but its no good now due to a new change that makes it a little bit confusing. Sogotrade web interface is not really good, but you can get used to it because if you trade a lot like me. Sogotrade is not a nobody like zecco, it comes from a big broker and not a broken bank underinvestigation by the us gov. Tradeking requires little document to open an account there, but it has a fun interface. At the end, all cheap one line trade brokers are fast. Choose the one that you like. I chose Sogotrade!

Chad: I have never used SoGoTrade, which is why I cannot compare them to TradeKing, Zecco, or ShareBuilder – three online brokerage accounts I have used before.

Zecco received so much attention and press because they offered free trades to virtually everyone – though that is not the case anymore. Of the three I mentioned, TradeKing is my favorite because of the interface, free tools and education, and the low prices.

DDFD at DivorcedDadFrugalDad says.

My view is that if you know your style it will help you choose wisely, are you a daytrader or a buy and hold kind of guy or gal?

My Journey says.

I used to use SogoTrade cause they were the cheapest and allowed for Dividend Reinvestment and Fractional shares….and boom they decided to stop so now I have everything at TradeKing.

Make sure of the features a site has in conjunction with the price per trade.

Wojciech @ Fiscal Fizzle says.

I use Schwab almost exclusively now, although I’ve had accounts at most of the other brokerages at some point in the last 10 years. I invest primarily in no-fee funds, so costs were not that much of an issue for me – the choice of funds was.

One thing I found particularly helpful when deciding on a brokerage were Consumer Reports ratings. They were pretty much in line with my own experience of the various companies.

Thanks for the tips, Wojciech! I haven’t checked out Consumer Reports for brokerages yet, but I did some online research on blogs and forums. I curerntly use Zecco and TradeKing, but prefer TradeKing overall.

How can you leave out Firstrade from this comparison? $6.95 trades and free dividend reinvestment.

I am in the process of closing my TradeKing and Zecco accounts. I don’t believe the $5 you save trading with them is work the lack of services.

There were a couple things that really bothered me with TradeKing. A wire transfer is cash money. However, if you wire money into TradeKing, and then need to get part of it back, they will not let you take out your money until after 10 days have passed from the time they received your wire. They are simply holding onto your clear cash to float your money and that is pretty crappy of them to do that. The second thing that I didn’t know when I opened my account with them is that they do not let you margin the leveraged ETF shares. That was a big surprise and a deal breaker for me. That is what lead to the surprise of them holding onto my cash that I wired to them for 1o days until I could get it back! That is crazy and for that policy alone I would not trade with them ever again.

If you really must save $5 per trade over better options, and you are going to decide between TradeKing and Zecco, I’d say TradeKing is the better choice of the two evils. Zecco is really bare bones; no pre or after hours trading allowed, no way to trade on mobile platforms, no service after hours, and a poor trading platform without any advanced order entry options. For example, you can’t enter an order triggers order with Zecco. (Say you want to automatically put in a stop order once your buy order is filled, you can’t do that with Zecco.) I had a bad experience trading a very leveraged ETF on 4x margin where the system would not let me enter my stop order. It could have been very serious if the market moved against me while I repeatedly tried to get the system to accept my order.

I’ve moved both my Zecco and TradeKing accounts over to TD Waterhouse. They charge $10 instead of about $5 that TradeKing and Zecco charges. If $5 per trade is going to make or break you, I don’t think you should be trading. I suggest you download the ThinkorSwim software (free) and check it out. It will blow you away. You can paper trade with a $100,000 account to try out the trading platform. For me the advanced real time streaming charts and advanced order capabilities at TD Waterhouse is way worth the extra $5 a trade. I’m really surprised the ThinkorSwim software is free. It blows away the streaming charts at TradeKing. At TradeKing you have to have a minimum of 25 trades per month to use their real time streaming charts. Try ThinkorSwim, you’ll love it. I run it with dual monitors and it gives me a very nice package of charts, news, and very advanced trade entry options. ThinkorSwim was the #1 rated internet broker and they have now merged with TD Waterhouse which was the #1 rated discount broker. Can’t go wrong with that combo.

I was drawn to the lower commissions at Zecco and then moved to TradeKing because of the extremely limited trading platform at Zecco. But it quickly became apparent that you get what you pay for and the extra $5 a trade at TD Ameritrade is well worth it for all the free tools, advanced orders, and real time streaming charts you get. With them you can even put in orders like “If the DOW falls by 3% buy TZA at market.”

PS & # 8211; Just saw the post from Brad. TOS stands for ThinkorSwim. I agree 100% with him. Zecco and TradeKing is really amateur hour stuff.

Just read your post Alan, Why not just have a TD Ameritrade / Think or Swim account with a small amount of money in it so that you can use all the free tools. TD Ameritrade has no yearly fees. Then use TradeKing for your actual trades.

That’s a great idea, Dan. I can see why some people would prefer not to do that – for example, if they don’t trade often or prefer to have as few open accounts as possible. But otherwise this idea could save money in the long run.

I think SOGOTRADE is pretty good. It only cost $3 to make a trade (unlimited shares). They have good online and phone support, quick execution and a good inventory of shares that you can short! Oh and you only need $500 to open your account. You also get 100 free trades when you open your account. Can’t beat that.

Hey Ryan, I wanted to find out if you know any good online broker that can be used to buy commodities (oil, cocoa, etc). Do most brokerages trade mutual funds or only single stocks? Thank for the great website.

Tee, Zecco and most discount broker offer a wide variety of mutual funds. I’m not sure which (if any) discount brokers offer commodities. However, you may find they offer ETFs or mutual funds based on commodities.

another thing that makes tradeking more attractive than zecco because they have a full fledged iphone and blackberry app. something thats going to be more & more of an utmost necessity in coming days .. very less brokerages in the same price range has that.. something very notable… seriously thinking about moving to tradeking from zecco..

Sim, I moved from Zecco to TradeKing. The individual trades are slightly more expensive, but not enough that it made a difference for me. I prefer TradeKing’s tools and interface. That said, investing is a very personal matter, and both companies offer investors a great product and a ton of value. I can’t imagine what it would have cost to get these types of tools 5 or 10 years ago (if they even could have been done!).

Discordo. In my opinion there are 3 things that matter in todays competitive ‘daytrading’ or ‘swingtrading’ mundo.

1) Atendimento ao Cliente.

2) low costs (low commissions with no fees, hidden or otherwise)

3) fast execution.

From the moment I opened my account at Lightspeed the customer service has been outstanding. The customer service rep, Jhoel, responded (and continues to respond) to every email, usually within minutes! Not only that, but I believe he is ‘assigned’ to my account. This means that I don’t have to explain or re-explain the issue to a new customer service rep each time. He is polite, knowledgeable and efficient. This means you have a rep who works with you in an ongoing basis, understands issues and develops a rapport with the customer. This should be an industry standard and Lightspeed does this for free. Yes, Web Trader IS a no frills platform, but there are also NO fees of any kind except the occasional SEC fee (to date I have paid just 5 cents on some transactions!) – no ‘maintenance’ fees, no ‘minimum trades per quarter’ (inactivity) fees, no platform fees, only a small minimum balance is required to avoid any fees (I think $5000?) and no BS! They also charge $3 per trade. Hello? I am an active trader, sometimes I don’t trade for a week or two, other times when conditions are ripe I may make 20 trades in 1 day. The fact that there is no pressure to trade (no fees at ALL) as well as some of the lowest per trade costs makes this a no brainer. I make appx 1000 trades a year, so lets do simple math. If I go with a company that calls itself a discount broker with no inactivity, maintenance or other fees like Firstrade for example (which also has no kind of fees, but has the WORST customer service I’ve ever seen, and lousy executions), they charge ‘ONLY’ 6.95 per trade. This means at year’s end I would spend $6,950 in commission with them, and pay only $3,000 with Lightspeed. This is simple math; a savings of $3950 a year, or over $329 per month, and if I trade more, I will save even more. That’s untaxed money added to your net profit.

As far as the ACH, I have been able to transfer in money with no problem, and while I am in the middle of setting up the ACH withdrawal (I mailed in their form), it can be done if you simply mail in the form and follow the instructions provided. I have not actually done an ACH withdrawal yet, but based on my experience with customer service (which in my experience has been the BEST I have ever experienced at any broker, and I’ve been with a few), I’m sure it will be no problem. By the way, did I mention they even have a live chat with operators who can see your account and answer questions in LIVE TIME? Yes Web Trader doesn’t have flashy graphics, and I think they need to improve by making a real time balance and begin pre/after hours trading abilities, but if I want flashy graphics I’ll play video games. If your a grown up and want to have REAL customer service, some of the lowest rates on trades, fast execution and a way to make it easier to make money, I recommend Lightspeed WebTrader and the team of people over there!

Bryce @ Save and Conquer says.

I learned my lesson years ago that I am not a stock trader, or a trader of any kind of investment vehicle. I am a buy and hold investor. Given that, I still want to have the lowest transaction costs as well as lowest recurring fees while holding a fund or ETF. Vanguard low-cost index funds are hard to beat, but a couple Schwab ETFs cost less for purchasing and holding their Vanguard-comparable total stock market (SCHB) and total bond market (SCHZ). The ETFs are free to buy through a Schwab account, and the annual expense ratios are 0.04% and 0.05%, respectively.

Ryan Guina says.

I’m in the same boat, Bryce – I’m a buy and hold person. I have Vanguard for most of my investments, simply because I have been with them for so long and they offer everything I need. Schwab, Fidelity, and several other companies also offer wonderful alternatives to Vanguard. I don’t think you can go wrong with any of them. Just look for the one that best meets your needs.

But if you do like to trade individual stocks, the discount brokers are often better options as they tend to offer lower cost trades, more tools, and a better interface for trading.

Dwayne S Dunston says.

I am looking to open my first brokerage account. I know I want to trade daily and often, the feedback from everyone was truly helpful. Thank you Ryan.

Hey Ryan, I just start it to trade, no experience at all. I wish someone can help me how to start it and which one of the stocks I can start with. Please tell me about your experience with SOGOTRADE. or other experience.

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Tax Implications of Writing Covered Calls against Long-Term Holdings.

Covered call writing is a short-term strategy where we sell Weekly or Monthly options to generate cash flow. It is best to use this strategy in sheltered accounts to defer or eliminate tax consequences but that is not always possible. Generally, the income from covered call writing results in short-term capital gains (losses) but there are exceptions to this rule. This article will review a few scenarios regarding long and short-term capital gains relating to long-term holdings (stocks and exchange-traded funds held more than 1 year and 1 day). Let me premise my remarks by stating that I am not a tax expert and the information is based on discussions I’ve had with CPAs who developed the Schedule D of the Elite version of the Ellman calculator (available in the Blue Collar store and free to premium members). Please check with your tax advisor before taking any tax-related actions in your brokerage accounts .

A 1-month option is sold against a long-term holding and is bought back or expires worthless.

The information is entered in the blue cells of Code D3 of the Elite version of the Ellman Calculator:

Sell Option/Buy Back Option.

The options are sold for $450.00 per contract on 2/19/17. This is the sale date. Notice that the acquisition dates (3/18/17) are later than the sale dates. If the options expired worthless, the acquisition date would be the expiration date and the cost basis would be $0.00. In the top row, the option is bought back for $250.00 (resulting in a credit) and in the second row for $550.00 (resulting in a debit). Once the blue cells are populated, the white cells on the right side of the spreadsheet will become populated:

Code D3: Selling and Buying Back an Option.

Code D3: Close-up View.

Notice that the column to the far right (top blue arrow) shows “S” representing short-term capital gains (losses). These returns are stated as dollar amounts, percentiles and annualized percentiles.

A 1-month option is sold against a long-term holding and is exercised resulting in sale of the shares (short-term holding also shown)

The information is entered in the blue cells of Code D2 of the Elite version of the Ellman Calculator:

Code D2: Option Exercised on a Long-Term Holding.

The top row reflects shares purchased on 3/18/15 for $45.00 per share representing a long-term holding. The second row reflects shares purchased on 12/19/16 for $69.50 per share resulting in a classification of a short-term holding. Both options were sold on 12/19/16 and were exercised on 1/20/17. Once the blue cells are populated, the white cells on the right side of the spreadsheet will show the calculations:

Option Exercise of Short and Long-Term Holdings.

In both cases, the option premium is incorporated into the stock sale. The shares purchased in 2015 (brown row) will result in a long-term capital gain while those bought in 2016 (yellow row) will result in a short-term capital gain. These returns are stated as dollar amounts, percentiles and annualized percentiles.

Covered call writing is generally a short-term strategy that will result in short-term capital gains (losses) when trading in non-sheltered accounts. One exception to this rule is when the option is exercised on shares held for more than 1 year and 1 day in which case the resulting profits (losses) are long-term as the option premiums are incorporated into the stock sale.

Next live event.

American Association of Individual Investors.

Washington DC Chapter.

Saturday July 15, 2017.

“Using Stock Options to Buy Stocks at a Discount and to Bring Portfolio Returns to Higher Levels”

Co-presenter: Dr. Eric Wish, Finance Professor, University of Maryland.

Global stocks declined this week, constrained by rising bond yields. The yield on the US 10-year Treasury note rose 10 basis points on the week to 2.39%, while the price of West Texas Intermediate crude oil declined modestly to $44.50 a barrel from $45.40 a week ago. Volatility, as measured by the Chicago Board Options Exchange Volatility Index (VIX), rose to 11.19 from 10.9 last week. This week’s economic and international news of importance:

The minutes of the June Federal Open Market Committee meeting show that some members want to begin shrinking the Fed’s nearly $4.5 trillion balance sheet as early as September The minutes of the European Central Bank’s June meeting show that officials discussed whether to drop the bank’s promise to increase the pace of its asset purchases if needed to stimulate economic growth. While they refrained from making the change, it is expected they will do so some time in the next few months Those small shifts in tone from the central banks helped send yields higher around the globe, particularly in Europe Nonfarm payrolls rose a stronger-than-expected 222,000 in June, beating estimates (174,000) Upward revisions to April and May payrolls added an additional 47,000 jobs to those previously reported Despite the solid employment gains, wage growth remains muted The unemployment rate rose 0.1% to 4.4% as jobseekers reentered the labor force Leaders of the G-20 countries gathered in Hamburg, Germany this week for a summit amid growing tensions over North Korea’s missile program. On Thursday, Russia blocked a UN Security Council resolution on that would have further isolated North Korea.

· China Consumer and wholesale inflation report.

· United Kingdom: Employment report.

· Eurozone: Industrial production.

· Canada: Bank of Canada rate-setting meeting.

· United States: Yellen House Financial Services Committee testimony.

· United States: Yellen Senate Banking Committee testimony.

· United States: Retail sales/Consumer Price Index/industrial production.

IBD : Uptrend under pressure.

GMI: 2/6- Buy signal since market close of April 21, 2017.

BCI : I am fully invested in the stock portion of my portfolio currently holding an equal number of in-the-money and out-of-the-money strikes. A good jobs report and a rebound in the tech sector on Friday were positives but my defensive portfolio mix remains the same.

WHAT THE BROAD MARKET INDICATORS (S&P 500 AND VIX) ARE TELLING US.

The 6-month charts point to a neutral outlook. In the past six months, the S&P 500 was up 7% while the VIX (11.19) moved down by 2.5%.

Much success to all,

Alan and the BCI team.

About Alan Ellman.

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72 Responses to “Tax Implications of Writing Covered Calls against Long-Term Holdings”

I recently read that 90% of option contracts expire worthless. This makes me wonder why anyone would ever buy an option. Is this why you only sell options?

Thanks for all the information you provide to us retail investors.

If it were true that 90% of all options expire worthless then it would present an arbitrage opportunity. But that’s not the case.

Contrary to what many web sites suggest, the vast majority of options do not expire worthless. The correct statistic is that 90% of options go unexercised which is very different than expiring worthless. It should also be noted that this says nothing about profitability.

Stats provided by the CBOE are that:

1) About 10% of options are exercised (gain or loss)

2) About 60% are closed before expiration.

3) About 30% expire worthless.

What is true is that the preponderance of options remaining open at expiration expire worthless.

Very well stated by Spindr0 and it highlights how many myths there are out there that must be debunked. For more:

That’s a nice thorough explanation (your link) of the myth about 90% of options expiring worthless thereby giving a seller an advantage. I may have to plagiarize it for my next book (just kidding 🙂

For option tax info, see page 60 of the IRS Publication 550. Some of it is quite confusing but the buying and selling of puts and calls is pretty straightforward. A good source of tax info with translation is:

Excellent article at GreenTrades. Tests your knowledge of principles and option terminology.

I did review my broker 1099Bs in detail (first year with options). Used Turbotax Business. As i recall, for some of the written (sold STO) options that were exercised the option cost was merged into the underlying cost basis. If a dividend was received, they adjusted the cost basis of the underlying (I know this for sure) . As long as I ended up with right gain/loss I was satisfied.

I can drastically see how the picture gets complicated if you do collars and offsetting hedging or repair trades. How do you keep it all straight at the end of the year?

I don’t know about Turbotax but the majority of these general usage tax programs do not properly deal with the many issues that arise for investors and traders. It doesn’t matter if the accounting merges the numbers or not as long as the trade info doesn’t involve a wash sale. 2+2 = 1+3 so ending with +4 is fine even if it doesn’t meet the laborious methodology the gubbermint wants you to use to get to +4 ;->)

Pardon the long answer to your question. I scale in and out of positions. In 2008 and 2009 I went wild (profitably). In January of ’08 I spent weeks trying to properly reconcile the wash trades. I’m no stranger to math or spreadsheets but despite that, I gave up in frustration because it’s just a a boondoggle. For example, scaling in and out with 20 trades in one stock can turn into 50 lines on the 8949 form. Imagine the precision needed, without error, to prorate the wash sale carryover to each subsequent partial trade? I shoulda been an accountant!

The short answer? I use a program called Tradelog which handles all of this almost flawlessly. Almost, meaning you have to make a few inputs for situations like stock splits where the number of shares don’t match EOY. Não é nada demais. They offer several subscription levels based on the number of trades made and the highest level is unlimited trdes. There’s a new owner but I assume nothing has changed. Gainskeeper is another investor tax accounting program. I have heard good things about it but I know nothing more than that.

Hey friends, happy weekend and happy July to all!

From a seasonality standpoint the first week of July did not live up to averages. Not sure if that means anything other than just stay cautious.

In my opinion in a market with this kind of daily volatility if you have a covered call stock buy in mind buy it on a down day dip. Then wait for it to bounce before selling your call. Don’t do it same ticket. & # 8211; Jay.

Back to the Broker commissions issue:

I have mentioned before I trade at Fidelity and Optionshouse.

At Fidelity I enter my CC with a Buy/Write and Debit limit. If a position gaps up, I have explained that when I see a Time Value of 0.1% to 0.2% of my Cost Basis, I unwind the position with a reversing buy-write (BTC, Sell Underlying). In all cases, Fidelity considers this as 1 ticket and get charged the basic trading fee of $4.95 plus Option contract fee ($0.65) plus a small activity assessment fee.

For the same Buy-Write transactions, Optionshouse does not consider the trades as one ticket and I am getting charged $4.95 for the underlying and another $4.95 for the option plus the $0.50 per contract plus the activity assessment fees (on a sell).

This fee difference can amount to $2400 per year for me.

What is the practice at other Brokerage House?

At Fidelity and OptionsHouse:

When doing Rolls only or Option Contracts only, the fee for both Brokerages is just one ticket ($4.95).

The best commission schedule depends on the nature of your trading.

If you trade larger blocks of shares, you’d be better off at a fixed fee broker like Tradeking or OptionsHouse @ $4.95 per trade.

If you trade small lots, you’re better off at a flat fee like Interactive Brokers who charges 50 cents per 100 shares and 70 cents per option contract (plus exchange fees) with a minimum ticket charge of $1. Even less if closing out 5 cent or less contracts. Assignment and exercise are free. Another advantage is that is that if you want to scale in and out of positions. At 50 cents per 100 shares, five trades of 200 shares is the same $5 commission as one trade of 1,000 shares.

A competitive newcomer is Tastytrade who charges $1 per contract for an opening trade, $5 for an opening stock trade (unlimited shares) and all closing trades have no commission but include clearing fees (10 cents per contract and $0.0008 per share).

The short answer? Depende.

Good morning S and Mario,

Hope you guys are having a nice weekend!

Mario, I am staying with Options House even though e-Trade has bought them. I have received assurance my grandfathered $3.95 rate for any size equity trade and no commission to buy back short interests below 10 cents value will still apply. You bring up an interesting point I did not realize at OH on buy/writes but I never do them same ticket since the market is not linear and I always figure I can get better overall pricing buying on down days and selling calls on up days. But that is just my opinion and tactic. It is easier to manage if you do it simultaneously.

S, TastyTrade is a tasty alternative if you pardon the terrible pun :). Tom Sosnoff is behind that. He designed Think or Swim, took it public then sold it to TD Ameritrade. I am hoping what he does drives others in the business to reduce rates and we all benefit.

You and Mario along with Geoff, Roni and others are real pros at this stuff even if you say modestly you are just retail investors!

But this is a great community where everyone is welcome to join the conversation. From the increasing number of posts I hope more folks feel less bashful every week. Come on in, the water is fine :).

The tax discussion makes my head spin. I only trade in my IRA’s. In cash accounts I just hold investments and when I get dividends that is easy to reconcile.

Alan and Barry close your ears for this :). I noticed the market has been having a series of up and down days, particularly in QQQ. Someone let the computers loose to do their thing :). I can never compete with them. But for fun I have been buying a couple one week out ITM calls on the down days and a couple ITM puts on the up days. I have a couple puts open at the $140 QQQ strike for Friday. It’s just trading for the heck of it with a pittance. But it has paid for nice dinners, a new grill, new patio furniture, etc. Jay.

Since you only trade in your IRA accounts, please move onto the next post (g).

If you sell a position in a non sheltered account for a loss and you buy them back within the 30 day window on either side of the sale date, you have a wash sale violation and you cannot deduct the loss. It is added to the new purchase price, creating a higher cost basis. You don’t lose the deduction. It’s just carried forward until the other trade is closed.

However, if you sell shares in a non-retirement account and you buy substantially identical shares in an IRA within 30 days on either side of that date (60 day window), it triggers the Wash Sale Rule and you cannot claim the tax losses for the sale and the basis in the IRA position is not increased. Don’t ya just love the IRS? Wash sale complications can be avoided by applying for MTM Professional Trader status but that’s only for the frequent flier big guys. The everyday Joe gets screwed.

As for the commission stuff, I think that tastytrade is affecting other brokers. A number of my friends and colleagues have negotiated lower commission rates by threatening to move their account elsewhere. If your account is large enough for them to care, it might save you a few bucks. The worst that can happen is that they say no.

It is fantastic to have you here. I have learned a lot from you since you joined our community!

Options House gave me several direct phone calls after the e-Trade take over to assure me of commission schedules and a seamless transition to keep my business. I hope Tom Sosnoff at Tasty trade scares the s— out of the online discount brokerage business!

A long time ago in a galaxy far away I was a retail broker at Merrill Lynch. If you wanted to buy or sell something you had to call me or I had to call you, I would write an order ticket by hand and put it in a vacume tube like at today’s drive through bank. It would get whisked away to the trading floor. I would later get a trade confirm back to journal entry in my order book by hand on your account page.

Meanwhile the Civil War was raging and Lincoln was President. Só brincando. But I was at Merrill in the mid 80’s and that is how it was and felt compared to today. So keep investing in Tech! & # 8211; Jay.

I did not last long in that business. I moved on but will always remember the experiences, training and learning. And the commissions back then were outrageous! & # 8211; Jay.

Obrigado pelas palavras amáveis. 30+ years ago when Al Gore invented the internet, I had the good luck to benefit from some experienced retail ‘optioneers’ who shared their knowledge freely. When I was on Prodigy in the early 90’s, one among many was Mark Wolfinger who I think was a floor trader (options), has written some books and currently runs a blog. So while it may sound a bit corny, maybe I’m just paying some of that forward.

Not only did I have a Merrill account back in the day but I got some great IPOs from them Boston Chicken. Callaway Golf. Callaway was a gem. IPO price of $20 and I sold at $37+ 15 minutes into trading. Only 200 shares but that’s a pay day! I was a bit of an IPO whore in the go-go internet 90’s. I remember the days you mentioned where you had to get your broker on the phone AND pay a horse sized commission to trade. Where than ran amok was Black Monday in ’87 when you couldn’t get through to your broker and couldn’t do anything with your positions. I had an account at Paine Webber and it felt like they had merged with Shearson. It was Shear Paine! (sorry for that). I had a covered call position on Bear Stearns that had expired ITM on Black Friday (expiration day) and due to the massive systemic disruption from the crash, they couldn’t tell me for 6 trading days if I had been assigned or not. Today’s young investors and traders have no clue how hard it was when you voted for Lincoln!

Don’t shrug it off as an easy decision voting for Lincoln. Douglass made a lot of good points. I wrestled with that one, My horse was sick that week so we did not get to go vote many times in many places like we always did :)! & # 8211; Jay.

In those daze (sic), did you submit your Merrill purchase and sale orders via the Pony Express?

Thanks for getting the Lincoln joke 🙂

My significant other tells me my humor is an acquired taste few get at first 🙂 But you seemed to pick up on it quickly. The Pony Express was on strike over the price of oats back then so i was just s— out of luck any way you looked at it :)! & # 8211; Jay.

In my experience, humor is an acquired taste for those who are a bit short on it. Those who get it, usually have it, particularly the kind where you have to connect the dots (and no, I’m not referring to those with crayons :->)

I am reading your Encyclopedia and learning a lot. In the technical analysis chapter you favor the 20 and 100 day exponential moving averages. I have always read that the 50 and 200 day simple moving averages are best for stock analysis. Can you explain why the difference?

The 50 day and 200 day SMAs are MAs that are used by institutions and tend to fit buy and hold strategies. BCI uses the 20 day and 100 day EMAs because they are shorter term focused and are a better fit to covered call trading. The EMAs give greater weight to more recent pricing while SMAs give equal weight to all prices.

The 20 day EMA represents approximately a trading month while the 100 day EMA is bit longer than a quarter of trading. These time frames fit the BCI methodology more closely.

What time frame or Multiple time frames should you use when looking at the chart with the 20/200 Ema averages. 1 month, 3 month? Do you consistently use the same time frame in your weekly report analysis? Is it subjective so different persons have reason to use other time frames??

It seems to give me different results depending on the setting.

I don’t mean to step on anyone’s toes but here goes anyway. Moving averages depict the past. They predict nothing. They help to identify trend as well as support and resistance. MAs are a lagging indicator. Simple MAs lend equal weight to all data so they lag more than EMAs which lend more weight to more recent data and are therefore more responsive to price change. The longer the period that you use in the MA (say 200 days), the later your signals will be -> In late, out late. The shorter the period used, the more timely the signal will be but the more whipsaws that you will experience. And as you noticed, if you change to length of the MA and/or the periodicity of it (# of days) it gives you different results.

MAs provide useful information but make sure that you understand what that information means. If you combine several MAs (such as the MACD), you’ll find that there are other complications such as potential false signals which must understood to avoid those traps. For a comprehensive understanding of MACD, read Gerald Appel’s book(s) – he’s the creator of MACD.

You nailed it on the charts. Eles são indicadores atrasados. You can’t draw a chart until you have data and you can’t have data until it has happened. I have been on a Quixotic quest for a leading indicator for as long as I have followed the market.

I finally concluded the best one resides in our brains. It is called “intuition”. When intuition is fed by historic data it knows people behave in predictable ways and can often – not every time – see their next move coming :). & # 8211; Jay.

I spent a lot of time in the early 90’s with some really bright people investigating TA. Here’s my two cents and at that rate, you may still be overpaying. No indicator is going to guarantee success. Many of these indicators are based on MAs so if you look at several of them so based, they may be giving you redundant information, reinforcing the same bias.

And then there’s the math. The silliest example is all of the ado about the Williams % Indicator which Larry Williiams has written several books about. It’s simply an inverted Stochastic.

If you delve into the math construction of each indicator, you’ll realize other things. For example, if the MACD turns up when below zero, it may or it may not be a valid buy signal but a turn up above zero has to be valid (and conversely above zero turning down). Whether it lasts and leads to anything is another story.

And then there’s the periodicity issue. Use a shorter term Stochastic and if above 80, it indicates overbought. Lengthen the number of days and it’s short of overbought, below 80. Now which signal (or lack thereof) is actionable?

Don’t get me wrong. I like Bollinger Bands. I like Point & Figure to remove the noise and depict short, medium and long term support and resistance. All indicators provide information but it’s the “mantuition” processing that figures it out. You cobble together a set of them into a system and if you diligently follow them, you start to achieve a more systematic approach to taking and exiting positions. But always remember that news trumps the best TA in the world. So make sure to practice good risk management when the sh*t hits the fan rather than being a deer in the headlights on the tracks at the mouth of the tunnel :->)

The worst part about your posts is they come to an end. I could read them all day long :)! I stole that compliment from a musician who was paying tribute to Gordon Lightfoot. He hated when Gordon’s songs ended because there was something soothing in his every lyric: surely they could just go on forever :)?

For us retail hobbyists who don’t have command of every technical indicator, 5 big screen computers in our home office and the time or smarts to devote to this stuff we hate to just buy and hold. But but don’t want to be crushed again like in 08/09 either.

No one ever went broke taking profits or owning index funds above their 200 day moving average. So as a minimum use that as a line in the sand. SPY is 7% above it’s 200 day. A bullish sign. If you do anything sell strength this month and buy the weakness that almost always occurs in late August and September.

My significant other loves sales. She hunts them out for clothes. But not for stocks. She wants to buy clothes when they are cheap and stocks when they are expensive. She has the credit card but I have the mouse so we strike amicable truce :). & # 8211; Jay.

If you’re mesmerized by my posts then you’re a glutton for punishment :).

I’m not an expert on anything and I don’t make any claim that my is the right way or the best way. There are many ways to skin the cat and anything I suggest is just what I have come to find to work and not work for me. If you do it long enough and pay attention and learn as best you can from your mistakes, it gets to be a bit of a routine. As for all of the indicators, they are indeed a line in the sand, aka a reference point. As for 08/09, I crushed it then but I’m not here to discuss that. All I’d suggest is that you devote equal attention to risk management. It makes no sense to work hard, save, invest, accumulate and then let the vagaries of Mr. Market rip it away. Some say that winter is coming. At some point it will arrive. Ask your significant other to help you find some appropriate sales if it comes :->)

Mesmerized would not be the word I would choose. Impressed serves better :)! I very much enjoy your contributions here.

I am glad you joined us. I enjoy your every writing.

I bought a few ITM QQQ puts at the close today just on the hunch traders will take back the gains tomorrow. I am overall long July and only sold covered calls on GLD since I figured it might go down. Por enquanto, tudo bem. I sold a bunch of OTM cash secured puts on thing I like and those are turning into nice income trades.

This can be argued many ways. These next sentences will not give either fine strategy the justice they deserve. So please let me apologize in advance lest I step on anyone’s toes!

In my simplistic opinion covered calls are bearish though they certainly need not be when sold OTM with bullish room for the under lying and/or ladder your strikes managing the trades with exit strategies and buy back//rolls. Cash secured puts are bullish. Just be sure to sell them far enough out of the money that you would be OK buying at the sold strike.

I have 5 sold put contracts on QQQ at 136 for July expiry. I would be be perfectly happy adding 500 shares at that price. My hunch is I will not have to. I will just keep the income. Point is I am OK either way. Please never sell a cash secured put unless you feel that way. & # 8211; Jay.

Don’t apologize for your opinion. Be open to the possibility that it may be wrong and if presented with information that suggests that it is, be willing to adjust accordingly. We know what we know but all of us do not know what we don’t know. You’ll know what that is when you stumble across it. And don’t worry about my toes – I have steel tipped boots (g).

Covered calls (CCs) and cash secured short puts (CSPs) with the same terms (strike and expiration) are synthetically equivalent. That means that they yield similar results. If anyone isn’t clear why this is so, ask away.

Since people tend to sell OTM calls, it’s considered a neutral to mildly bullish strategy (the same terms ITM put would be the synthetic). However, using a different strike price alters the risk profile. If one was somewhat bearish, one could sell a somewhat ITM call. If very bearish, I’d sell the stock but in line with this explanation, one would sell a deeper ITM call.

I’m not a big fan of CCs and CSPs because of their imbalanced R/R ratio. If you look at it as a binary choice of (A) or (B), then either position fares better to the downside than the outright share owner. If you think that you’d prefer a better R/R ratio then you have to consider (C) or (D) or … Such choices might be the Poor Man’s Covered Call, Collars, and Spreads. Collars are synthetically equivalent to Vertical Spreads (ask away if you wonder why) and they involve less risk, far less margin, a higher ROI but a lower total credit premium – there are always R/R trade offs choices involved.

There’s no ‘best strategy”. You find a stock that you like (or for that matter dislike if you like the short side), determine your outlook for it (hope?) as well as risk tolerance and then you select the option strategy that best fits that outlook and provides an acceptable R/R profile.

Good luck with your GLD position. I’m currently short one higher priced gold stock and long some of its Aug ATM puts as well as long three lower priced gold stocks. I don’t really care that much which direction it goes as long as it goes somewhere, like they did today (volatility). It’s a multiple legged Pairs Trade… Don’t ask :->)

This week’s Weekly Stock Screen And Watch List has been uploaded to The Blue Collar Investor premium member site and is available for download in the “Reports” seção. Look for the report dated 07/07/17.

Also, be sure to check out the latest BCI Training Videos and “Ask Alan” segments. You can view them at The Blue Collar YouTube Channel. For your.

convenience, the link to the BCI YouTube Channel is:

By the way, I’m happy to report that I survived the 2017 NJ Rugged Maniac Race…it was a 5K with 25 obstacles and more mud than the Amazon jungle. I’m still tasting mud!

Also, as a reminder, the report for next week will arrive on Monday. I will be with Alan at the Washington DC Area next weekend helping Alan with his seminar for AAII members.

Barry and The Blue Collar Investor Team.

Congrats Barry! Are you anywhere in the video here?

It’s rare to see a group of Americans these days where.

the majority aren’t clinically obese – “your health is your.

The video is a promotional video. I’ve atteched a pic of me at the finish. That red t-shirt came down to my waist at the start of the race but the mud added a lot of weight and stretched it!

I think I was the oldest person to compete on Saturday…but I finished…without too much wear and tear. Net/net, it was a great event. now that I know what to expect, I’ll train differently for it next year.

Nice shot Barry – that could be your new profile pic! Hopefully you didn’t need to use public transport to get home… 🙂 Perhaps you.

can drag Alan along next time – he is a former health professional.

after all. Personally I take regular 5-6 hour hikes which are also.

good for getting away from the city air for a while.

There is no one technical indicator that is so accurate we should hang our hats on it. Technical analysis is as much an art as it is a science. It should be viewed as a mosaic of multiple indicators painting a picture that will then represent one of several screen in determining whether a security represents an eligible underlying for our option-selling strategies.

In the BCI methodology, we use 20-d and 100-d exponential moving averages, MACD histogram, the stochastic oscillator and volume to paint the mosaic. These are the parameters where I have found the greatest success over the past two decades as it relates to these strategies. They certainly aren’t the only indicators that can lead to success and those who prefer others should employ them. If we get 100 chartists in a room and ask for preferences there is sure to be dozens of opinions with no right or wrong.

The takeaway here is that technical analysis is a critical part of our screening process and there are a multiplicity of parameters available to enhance our investment success.

I’ve had consistent success with AMAT for the past 5 months (more than 2% per month) since it appeared on your list but in June it took a downturn but recently headed back up again. Is this a stock you would take a bullish position, defensive position or remove from my portfolio for the next contract?

Based on emails I have received from members, you are not alone in having this security in your portfolio for the past several months.

It’s too early to make a decision regarding this stock moving forward from the July contracts. Let’s see what the chart looks like as expiration of the July contracts approach. Most importantly though, we must keep an eye on the projected 8/17 earnings report. This stock does have Weekly options which can be used to circumnavigate around the report.

Mantenha o bom trabalho.

I continue to back-test and live trade CCs to help master the skills to succeed.

I have a question about your 12/18/15 (yes, 2015) weekly update.

In the weekly update section you state, “Cautiously bullish but remaining defensive selling 50% ITM strikes and deeper OTM puts until clarity with market reaxction to fed rate hike.”

Do you mean 50% ITM and deeper OTM put? or 50% ITM and deeper OTM call?

I have a copy our your book, Selling Cash-Secured Puts and I will look there too for the answer.

When I take a defensive posture in my portfolios, I use a higher percentage of ITM call strikes and deeper OTM puts. In the former, intrinsic value protects time value of the premiums and in the latter, the breakeven is at a lower price.

Let me clarify further Alan’s response to you in regards to your question on Cautiosly Bullish with 50% ITM and deeper OTM puts. I am sure he will remark if I am incorrect in any way.

I do have his two books Classic Encyclopedia and the Cash Secured books.

With regards to 50% I interpret that to mean his division of positions is:

A, 50% ITM calls or deeper OTM Puts (any combination of thsse two to make the 50% of your account)

*** A1. ITM calls have downside protection from the purchase price to the Strike.

*** A2. OTM Puts have downside protection as well from the Price of the Underlying stock (you don’t purchase the stock when you sell the option, but you know the price when you made the Cash Secured Put trade). By deeper he means he selects a lower strike so the downside to the strike is larger. This is cautious because the stock has to fall further before your ROO% is affected. Of course when you do that, there is less ROO% gain but that is OK since we are being cautious. The ROO% would normally be 2-4% but when going deeper may be 1-2%.

The break even point is the Strike – the Premium.

*** B1. Half of his trades are OTM Calls because he is still bullish. The OTM calls have in addition to the initial ROO% at trade time and Upside potential to the Strike when the stock hopefully rises during the cycle. The total gain for an OTM call is greater than the ITM call and you get that gain by sacrificing the Downside Protection, which does not exist with an OTM Call. .

Espero que isto ajude.

In a different venue today I discussed the market with other friends. I was fully disclosed: I said I was long, have an S&P target of 2500 in mind in the coming weeks but am worried about the late summer and early fall due to seasonality patterns.

That group is not keen on options. I am not keen on Missionary work. So, like the Beatles, I “Let it be” :)!

I have made mistakes in the past preaching options to reluctant friends. You have to let them come to you when ready :)!

But I hope those friends and I do not suffer group think because we are all bullish the market for July! & # 8211; Jay.

Re MDSO, how often is it that earningswhispers gets it wrong like that with the earnings date, changing from July 26 to July 18 and thus going from after the monthly contract expiry to just before?

Currently it’s 8.3% above my $75 strike price so I figure I’m best off hanging on and riding out the E. R.

Reporting sites occasionally get the date wrong. Sometimes it’s because the company changed the earnings announcement date.

This issue comes up from time to time. We use a number of sites to determine ER dates. Historically, EarningsWhispers has been the most consistantly accurate. Their site also indicates when an ER date is confirmed. When this occurs, we indicate the confirmation by bolding the date in red on the Weekly Report.

I would estimate that EarningsWhispers is over 95% accurate in their reporting. When preparing the report each week, we review the ER date for every stock on the list (both in the white section as well as the pink section) and provide the most current date. For the times when EarningsWhispers shows an inconsistent date, we use the following sources to attempt to find the best estimate of the ER date:

& # 8211; Company website news and PR page.

& # 8211; Phone call to company CFO.

Since the ER date “rule” is foundational to the BCI methodology, we make every possible effort to get the most accurate information. Historically, there have been times when a company changes the ER date and that change does not appear in our primary sources.

I hope this answers your question. Please get back to me if you would like to discuss this further.

Thanks Spin and Barry – obviously from your reply Barry it would be fairly rare for the combo of wrong date and wrong side of contract expiry. There’s obviously some experienced traders posting here – would anyone think about doing some sort of hedging trade in this situation?

Two more reliable web sites for earnings are Zacks and Briefing.

Ask for the hedging question, there are a variety of ways to hedge and they have different costs and degree of protection (covered calls, long puts, collars, etc.). So it depends on what you have in mind. Earlier today John asked about the 12/19/15 article and by coincidence, it was a hedging article (Collars). I’d walk you through some of it but you’d have to spell out more details to do that.

I am not sure whether this analogy will be helpful but a long time ago when I was in the US Army in land navigation training they taught us to go back to the last place where we knew where we were if we felt a bit lost and start over.

I do not follow MDSO but it sounds like it has been a good stock. They moved the goal post on you with the earnings date. But your $75 covered call will likely be a successful trade regardless. I obviously don’t know your basis, how that is taxed and all of that stuff. So if we just reduce this to basics and back track it if you knew the ER was coming out in this July expiry would you have still held the stock and just waited to cover it?

If so you are bullish the stock. Has any of your research since changed that opinion?. If not and since you only have a bit over $6 a share at today’s close of intrinsic value and a little bit of time value to buy back I would buy back your $75 calls on any weakness between now and the 18th, hold it through earnings and go from there. Regardless I hope it works for you either way. There are certainly tougher jams to be in :)!

You could certainly buy some calls for next Friday to hedge the ones you sold. But if you like the stock and have no reason to suspect a downsize earnings surprise I think just spending the money to go back to an uncovered equity position and wait out the ER is best. & # 8211; Jay.

“When I was in the US Army in land navigation training they taught us to go back to the last place where we knew where we were if we felt a bit lost and start over.”

Did you walk in circles a lot? :->)

MDSO is a high implied volatility stock so buying the short call back early still costs some decent time premium. And any kind of put protection will also cost. The intrinsic value provides about 6+ dollars of hedging. If there’s concern that the stock could fall more than that, take whatever gain you have by closing the position. Get out of Dodge City.

I’m a bit confused by everyone’s concern with the EA. If one felt that the stock was going to rise significantly from it then you wouldn’t want the encumbrance of the short call. But if you’re writing covered calls (an income strategy), that’s not relevant. And I don’t follow why you’d “buy some calls for next Friday to hedge the ones you sold.” That might work for the upside opportunity loss but it does nothing for the imbalanced downside risk that a covered call writer faces. Color me confused…

I still walk in circles all the time 🙂

My suggestions to Justin were based on the fact he got some bad info from his stock about when they would report earnings and is concerned about having a covered call in place when those earnings come out on the 18th.

I should have been more clear since, you are right, the off handed suggestion Justin buy some calls only compounds his downside if his stock tanks after earnings. The idea was that if he did not want to unwind his covered call before earnings, knows it will be called at current price levels but would like to at least get a bump if his stock has a good earnings event then buying some calls was an idea.

My core suggestion was to either let the trade stand or buy the call back on any opportunity if the stock shows weakness before earnings.

It sounded like Justin’s main concern was he is holding a covered call with an earnings report through no fault of his own since they jerked him around a bit on the dates.

Your point on the ER/EA events is well taken. But since they can create volatility many covered call writers avoid them so as not to limit their upside on good news. When things go down we all wish we had sold covered calls for the protection :). & # 8211; Jay.

PS: Regarding your time in the army, thank you for your service! I have the utmost respect for veterans, even if they are covered call sellers :->)

I appreciate your kind sentiment Spin. I would do it all over again. ROTC paid for college and the friends I made serving are the ones I stay closest with today. The experience I got helped me immensely in industry. I was fortunate to have been in during peaceful years. But many friends who made careers of it served multiple deployments. Those are the guys I tip my hat to! & # 8211; Jay.

Thanks Jay, it’s not a big deal – only 200 shares and 2 contracts, so it’s more of an intellectual exercise than anything. My primary reasons for the MDSO CC was that it had a bullish chart, was on the BCI list, and was offering a 3.1% monthly return with 4.3% downside protection of that profit. Also I didn’t have to worry about the ER since that wasn’t until after the contract expiry 😛

I don’t have any great insights into MDSO itself so the aim was to divest myself of it at the end of the July contract. Thus I was thinking that maybe hedging the entire CC position by buying a put option on maybe the 75’s or 80’s might be the way to go (if the price is right) in late trade Monday (seems MDSO’s ER is at 6:10 a. m. Tuesday.) Or of course I may be able to buy back the options at a decent price late Monday, so it will be interesting to see what’s available then.

Thanks Justin, our notes just crossed, I had not read yours before I replied to Spin. Hopefully all of this makes collective sense when read as a conversation :)?

Glad it is a small position however you decide to manage it. I think “Trade small and trade often” is a great motto :)! & # 8211; Jay.

Looks like we were all typing our posts at the same time!

Jay and Spin, my big concern is the same one that Alan has often pointed out, that my upside is limited (3.1% in this case) while my downside is huge – I note that MDSO fell nearly 25% after a bad ER in 2016 for instance, which isn’t such an unusual occurrence in stocks generally. So I have to try and calculate the odds and possible size of a big fall and what that’ll cost me to decide if my best bet is to just hold and ride out the ER – as Spin points out I have a substantial cushion currently which could well mean that my smartest play is to do nothing. I should have better info of course late on Monday so I’ll wait until at least then.

“Trade small and trade often” – isn’t that the TastyTrade motto Jay? 🙂 Actually I’m just trading relatively small since I’m only in the early stages of ramping up the amount of capital I’m committing to CC’s, and intend to commit a lot more as my experience (and hopefully profits) grow.

Covered call writing is a bird in the hand income approach. In return for ceding the upside, you receive a call premium that is yours to keep, regardless f what happens with the underlying. That premium lowers your cost basis as well as your standard deviation. It works well in neutral to mildly bullish/bearish markets but very poorly in a a bear. Use them if you’re looking for income. Avoid them if looking for growth, unless you sell deep OTM low delta calls (perhaps ). They’ll also give you more SWAN if you start scaling up your position size as you progress and accumulate more.

the experts have given the answer and debated your MDSO question, but I would like to add my tip.

This happened to me many times.

Just a few days ago I got the same situation with PYPL and SWKS.

The BCI guidelines are clear. Earnigs reports are a huge risk.

So, take your profit and get out of MDSO.

Use the cash to enter a new trade on a better ticker.

You may regret the missed opportunity on MDSO, but you will avoid a possible big loss (Which is much worse).

Btw that’s what I did with my PYPL trade. I am still holding my SWKS shares, with my finger on the trigger, and will not take it through earnings. (I had already bought back the CC for 20% of the premium when the stock dropped sharply in the first half of the option cycle, and was hoping for a double, when they changed the ER date).

We must trust the BCI methodology. It works fine if you do.

Absolutely, I’m in the CC’s for income, not growth 🙂 Btw what is this SWAN you mention?

Interesting you say the ER moves happen to you often, since I was assuming they were a rarity. However PYPL looks ok with a date of July 26? And SWKS actually looks ok too – their ER isn’t until after COB next Thurs, and already there appears to be very little time value left in the options, unlike MDSO.

Me desculpe por isso. Sometimes when I speak the pitter patter, I incorrectly assume that everyone knows WTH I’m taliking about, sometimes even me as well :->) . So my bad. SWAN = Sleep Well At Night.

MDSO options are expensive because.

1) Normally, they have about twice the implied volatility than SWKS options, and.

2) The nearest SWKS that expires after the ER has inflated about 50% whereas for MDSO, they have doubled so loosely speaking, MDSO has about 4X the time premium that SWKS does. Good for sellers, bad for buyers, unless doing both.

For those concerned with ER-s, you might consider collaring the stock for the ER so that you manage the risk, rather than bouncing in and out of positions. Now this might be getting a bit too deep into the weeds but if you’re selling weekly options, if you make the leap into collaring, then you might consider diagonalizing it at no cost. The ER inflates the earliest expiration after the ER the most. That means that relatively speaking, the following week is cheaper. Post EA, if the stock craters, you have some loss down to the long protective put strike but you are protected below that. If it rockets up, you are assigned and you book your profit. If it goes nowhere, next week’s long put can be kept for protection or you might be able to cash it in for some salvage value, enhancing your yield. You have to work the numbers to see if this is appealing or not.

Thanks Spin for clearing that up, now I see that if I want to SWAN, I should trade like a CHICKEN 🙂 Which is good because all my CC trades for this month were ITM, apart from CTRL which was slightly OTM. I’d probably do better at this whole Swan thing though if the US market didn’t open at 11:30 pm my time – sometimes I just stay up late for a while, other times I get up for an hour or two in the middle of the night to keep tabs on things. Actually right now I’d love all my contracts to just expire,

since they’re showing me my max. possible profit of 3.7%.

Re MDSO weeklies, they don’t appear to have any so I guess my choices are still hold on, buy back or buy puts – thanks for that though as it could be useful info in similar future situations.

Instead of trading like a CHICKEN, you should pretend that you are at the zoo and buy SHEEP and sell DEER. And as for the market opening at 11:30 PM time, you could solve that by setting your clock 10 hours ahead so that you could be trading at the same time we do :->)

MDSO does not offer weeklies. You can Google the complete list if need be.

Here’s an inaccurate guesstimate of the diagonal suggestion for AKAM which has an ER on 7/25. I say inaccurate because the quotes at this time of the AM are last trade so the B/A is not reflected. AKAM closed at $50.08. Randomly picking some strikes, if I wanted an approximately 5% collar, I’d sell the 7/28 $53 call for $1.44 and use the proceeds to buy a put for close to that amount. What’s available?

If you do the collar with both legs for 7/28 (one cent credit), everything expires that day. If you go out a week at a time, each successive collar costs 7, 9, 22 and 25 cents. There are a myriad of possibilities but let’s just look at one. You sell the 7/28 $53c for $1.44 and you buy the 8/25 $47.5p for $1.69 (a debit of 25 cents). If AKAM finishes b/t the strikes, the call expires worthless and you own the $47.5 put for 25 cents which expires 4 weeks later. If there is any salvage value, you can cash it in to get back part of that 25 cent debit or you can hold onto it and be protected for another month. yes, you gave up that call premium but in return, you still had the opportunity to be assigned at $53 without the chance of AKAM dropping 10 points and taking more than $3 away from you.

Again, real time won’t look this pretty when you factor in B/A spreads so you may have to shift the put strike down 50 cents to get close to no cost for the collar. The important point is that you can take advantage of the ER induced inflation of near term premium in your positioning and this also demonstrates the flexibility that options give you.

OK, mike drop before being thrown off stage :->)

I’m rather wary of these weeklies Spin – I looked at a bunch before and found minimal OI and lots of big spreads; also I read some complaints somewhere that the market makers were taking advantage of the traders somehow or other, I don’t remember how. So I’ve decided to keep it simple at least for the time being and stay with the CC’s for now – how are the weeklies treating you?

Let me frame my answer in the context of a covered call writer.

Shorter term options offer a higher ROI and decay faster but they offer less premium and therefore less downside protection. So the question is, does a near term weekly offer enough of each? If not, you go out a week at a time until you find one that provides enough premium, ROI and downside protection to suit you. That price could be a weekly, it could be a monthly. The sweet spot for time decay is 30-45 days so going out further than that provides less theta (time decay) and a lower ROI. It’s not a question of one being better than the other but which one is best for your fear and greed (risk tolerance and profit objective).

Conventional wisdom suggests avoiding options with low OI and wide B/A spreads. I see at it differently. Writing a CC is a transactional event where the strike price plus premium provides an acceptable sale price. If you don’t want to sell at that price pick a higher strike. If you don’t want to sell your stock at all, don’t monkey around with CCs.

If the bid of the call that you are willing to sell offers an acceptable premium, does it matter to you if the spread is 5 cents wide or 50 cent wide? Does it matter if the OI is 2 or 100? Either way you contract for an acceptable sale price. The only way the B/A spread an OI is going to bite you is if something changes and you want to cover the short call. So my question is, if the current bid is acceptable, are you going to avoid selling the call because you might change your mind? If yes, then avoid wide B/A spreads and low OI. If it’s a buy and hold unless assigned position, sell that call.

Let’s project this to weekies. If the bid of any weekly (or monthly) call is an acceptable sell price, how is the market maker taking advantage of you? It’s a contractual transaction at the (acceptable) bid and it doesn’t matter if the MM or another person is the counter party to the trade. You got your price.

about PYPL, you got me baffeled:

When I looked it up last week EW showed July 20, or my eyes confused the 6 with a 0, which is not impossible because my eyesight is pretty bad after trombose, glaucoma, and cataract.

Getting old is tough. 🙂

I can see your point Spin – I haven’t analysed enough weeklies to be sure one way or another. I do recall that when it was a wide spread that the bid was never close to an acceptable price though so I lost interest since I was finding plenty of good trades on the monthlies.

Anyway great to see another good night on the market and I’m off on a day hike now 🙂

Here are some Bid – Spread Questions:

Stock Option has a Bid – Ask for $1.00 / !.30 (Mark or Midway 1.15:

The Bid is the highest Buyer and the Ask is the lowest seller from the Market’s point of view.

Question 1: If I Play the Spread and Sell to Open 1 Contract STO Limit 1.15 (All or None set to None, the default) (I am the seller now), Send the Trade, See it in the Order window, Wait 1 minute and see no execution. why do I not see the Ask price displayed as 1.15 on my computer screen per the Limit Order Display Rule? Is it because I am a small potato or is there a latency that eventually take into effect?

Classic Encyclopedia Page 223-227 (Show or Fill Rule or Limit Order Display Rule or Exchange Act Rule 11Ac1-4: Per this rule the Market Maker must display my offer by changing the ASK price to 1.15.since I am now the lowest seller.

Question2: Am I correct in stating if you are placing a Covered Call Limit order or a rolling Limit order that the Limit Order Display Rule does not apply since you cannot parse what the Asking price is for each component (Stock, Option)?

20 Contract Obligation:

I also understand from what I have read (if not out of date!) that one thing that affects your execution is the obligation of the money maker to fulfill up to 20 contracts at that asking price if at least one contract is fulfilled. Isso significa o seguinte:

A. The money maker, in order to avoid fulfilling this rule and lose some profit (He will have to sell 19 other contract at the lower asking price), will fulfill my single contract offer and is then not forced to display it per the Limit Order Display Rule.

B. If I had originally placed an order for 15 contract, he is obligated to fulfill that order in full and not partially, because of the 20 contract rule at a displayed price.

There’s latency if you were placing the trade with Jay and his vacuum delivery to the guy on the horse who rides over to the exchange to place it. :->)

Seriously, If you are splitting the B/A with your order, price should be reflected. It doesn’t always happen and why, I don’t know. It may be a broker software issue or maybe the computer gerbils aren’t awake yet but the order size has no relevance. The system is designed to facilitate the little guy. There’s a lot of price spoofing by HFT guys but that doesn’t apply in your scenario since you have become the best offer.

I’m not sure what you mean by parsing what the Asking price is for each component. When placing spread orders, the market maker is under no obligation to fill your order if your execution price is not available from current price. The two respective legs have a bid and and ask so price is apparent. A combo order spread also has a B/A quote. Since a spread can be bought or sold, the quote will be A1-B2 (buy) and A2-B1 (sell). Rut roh, confusing math time.

For example, the July 20p is $1.00 x $1.25 and the July 19p is $0.25 x $0.35. There are two spread prices so.

A2-B1 is $1.25 – $0.25 or $1.00.

A1-B2 is $1.00 – $0.35 or $0.65.

and the combo spread order will be quoted as $$0.65 x $1.00.

You can then split that B/A and place your spread order anywhere b/t $0/65 and $1.00. With more liquid options, you’ll often get better fills b/t the B/A though sometimes, you won’t, despite the liquidity. I’ve never been able to figure that one out.

I hope that this makes sense and I hope that I was understood what you were asking. If I didn’t, move on to the next reply :->)

I have been leveraging the Show or Fill Rule for years and my limit order is always published if the trade is not executed as long as the AON box is not checked. I enter for 10 contracts or less. I also move slightly in favor of the market-maker once the “mark” (midpoint) is identified…$1.10 in your example. With adequate option liquidity, your trade will be executed more often than not. This rule was developed to protect all of us “small potatoes”

Using combination forms will weaken our “Show or Fill leverage” compared to legging-in but may add commission savings with some brokers.

I would try executing 10 contracts or less per trade. I believe you are more likely to get successful trade execution compared to 20 contracts. This is the guideline I have been using successfully…let us know.

Just re your last point – if for instance you wanted to sell five contracts, do you think you’d improve your chances of a fill by.

selling them one at a time? (With Interactive Brokers for instance the commission is trivial so that needn’t be a deterrent.)

I would do all 5 at one time. My experience has been (for 10 contracts or less and adequate liquidity) that there will be a high degree of execution success as long as the limit order is placed slightly on the market-maker side of the mark.

The only deterrent would be placing the spread order as AON because you could miss a fill if less than 5 were available at your price.

IB will give you a partial fill of 1 or more contracts any time a matching price becomes available. And even though IB’s commissions are trivial, when you place an order that provides liquidity, you often get liquidity rebates (commissions are lower). I can’t provide any proof but in nearly 20 years at IB, I have found that single contracts/combos get filled at a higher commission charge (their normal fee) whereas with larger orders, some of the partial fills may have a lower charge. A multiple fill means say you place an order to buy 8 spreads and you get fills of +1, + 3, +2, +2 (total of 8) at a different component prices but all have the same spread cost.

Trading experiences – July 12-14, 2017:

The last 3 days I really exercised the knowledge I have received from Alan and from actual trading for 15 months. Out of my 20 current positions with 11 Stocks , 4 started as OTM, 13 were ITM.

As of last Friday 7/7/17 my 4 account Portfolio at 2 Brokerages was 95.2% invested and YTD I am at 8.2% and 16.4 annualized. This was despite I was down $7000 from my Account value high point for the year which occurred on 6/23.

20% rule execuled:

Because of the recent downturn in some Leisure stocks (HLT-hotel) and (MGM-casino), technical stock ATVI-software, and the ETF QQQ-Nasdaq ETF. Between 7/3 and 7/7 last week, all these stocks crossed the 20% call value premium rule (20% of STO premium of option). In one account, the BTC premiums ranged from $42.00 (2 contracts) to $140.00 (7 contracts of MGM at $0.20 per share).

It’s interesting to calculate the Price decline of the Underlying from the Purchase date or Price of last Roll of the 4 stocks when they hit the 20% Rule: MGM Strike 33 (8%), MGM Strike 32 4,8%, QQQ 3.3%, ATVI 6.3%. Varies I am sure because of the volatility of the stock. Per Alan’s rules, you use the 20% rule irrespective of the OTM or ITM purchase type. ATVI was the only OTM stock and its drop was in the middle of the range.

To execute the 20% rule, I automated the process with a BTC GTC order for the Option leg only as I saw the price dropping. This was Week 3 of a 5 week cycle so the 20% rule is in effect (Changes to 10% in 4th Week or 5 week cycle).

For the limit order, I even took into account commission effect on the trade if contracts were small and the stock was not consolidating at the 20% price level – since a $6.00 (Base plus contract) charge on 100 shares is $0.06 or $6 expense while on 700 shares is around $0.01. That is significant when later you want to trade an STO order with a smaller time value (decay) than your original purchase.

After filling the BTC orders, I then waited to “Hit a Double”, the goal of which is to wait till the price of the Stock price recovers to at or near the original price and then placing a new STO order to get a second round of income.

I found, when doing my documentation, that there is a reserve put in your cash to cover the BTC, Interesting how your Account value remains the same but your Cash available to Trade is reduced by the reserve. Fidelity and Optionshosue call this “Committed to Open Orders”. Optionshouse calls the two Cash Available to Trade, and the reserver, Cash on Deposit. The amount reserved includes the commission, too, but not the management assessment fee.

Summary of Trades 7/12 Wed – 7/14 Friday.

A: 7/12 1 – Multicontract Unwind and (GLW) with Buy Write Sell order loss of 0.21% loss or $42.63 out of the 1036.56, 5.1% net gain in the position This was followed with a search on Week 4 of 5 of where to spend the New Money released. See detail below.

B-B1: 7/12 Hit Double on QQQ (100 shares strike 140.5 )(3 positions). Typical trade: 7/3 BTC loss was 0.41/share, 7/12 STO gain was 1.34 /share for net “hit double” gain of $93.31 or 0.66% in position. Final net gain is 308.76 or 2.2% Gain. 3 Positions filled on an automated existing STO limit order 3 minutes before closing time Wed. when QQQ hit a last price of 140.7.

B-B2: 7/12 Hit Double on ATVI (400 shares strike 60) (2 positions). This was an original 5/19/17 OTM trade with a ROO Cost basis of 54.59 and Strike 60. Expired Worthless and Rolled last cycle. BTC 20% Rule loss was 0.31 or – 0.56%. STO gain was 0.9706 or 1.8% for net Hit Double gain of 1.24 of 2.3%. Net final position gain 2353.12 or ROO 10.8%. This position will be retired next cycle since Earning report is on 8/3.

C. 7/14 Hit Double on MGM Strike 32 with gain 0.54% after including BTC loss.

Detail of GLW Mid-Contract Unwind:

GLW-Corning – Multi-Contract Unwind-Week 4 of 5:

The stock gapped up further and I saw an opportunity for a Mid-Contract unwind with a loss of less than 0.2% after commission to use the money for new positions. For a typical calculation I did the following:

1. GLW Current Covered call info: GLW 700 shares with Option 7 Contracts 29 Call Exp 7/21. Originally purchase 5/3, Rolled 6/16, Strike 29, ROO% Cost Basis 29, Current Gain of 1036.56 or ROO 5.1%. (1036.56 / (29*700)=5.1%).

2. To unwind GLW with 0.1 to 0.2% loss in including commission I did the following:. Commission about $10 for Unwind or $0.014 / share ($10.00 / 700) shares (actual was – Fidelity $10.40 – 4.95 plus Fee 0.5, and for the option 4.65 plus fee 0.30). For the time value, 0.1% loss is a time value of .029 (Cost basis * .001). The total is an allowable time value of .043 (.014 +.029). To guarantee this time value I set a buy-write Sell order with a credit limit of 28.95 (Strike – Time Value). (Remember I posted earlier a proof that the Price of the stock does not matter if you want a certain time value, that is equivalent to the Current price of the stock – Premium paid. This is only true for ITM calls.).

Actual final trade was at credit limit of 28.94 which is 0.21% loss (.06 / 29). Actual share price was 30.79 and option price of 1.85. The difference is 28.94, which correlates with the Credit Limit.

On an investment of $20,300 (29 x 700, ROO CostBasis) that is $42.63 loss out of the current gain of $1036.56, which reduces the ROO% from 5.1% to 4.9%.

Ending the Story:

With the New Money released with my unwind of 2 GLW positions (500 15.3K, 700 shares or 27.5K ), I searched far and wide for a Stock that looked favorable, ITM, BEP good, lower volatility in charts, and a reasonable ROO%. Looked at latest Premium Report, first for Positive, then Mixed Securities. No luck. Checked Last Weeks Premium report. No luck.

Checked last cycle stocks. Found ATHM with an ER of 8/9 which gapped up on 6/9 released for new money. This chart and BEP points looked good. Strike 45 Exp 7/21. Ended filling two order with Time value of 0.47 (1.04% ROO% and debit limit of 44.54 (45 – 0.47 Strike – Time Value). Added additional income of $291.4 (.47×500) and $329 (0.47×700) to two accounts before commission.

Here is a correction for my Post of “Trading Experiences”..

Paragraph B-B2 for ATVI Hit Double trade is corrected below.

B-B2: 7/12 Hit Double on ATVI (400 shares strike 60) (2 positions). This was an original 5/19/17 OTM trade with Purchase price of 54.59, ROO Cost basis of 54.59 and Strike 60. Expired Worthless and Rolled last cycle. BTC 20% Rule loss was 0.31 or -0.56% (0.31/ 54.59).. STO gain was 0.9706 or 1.8% for net Hit Double gain of 0.6602 or 1.24%. Using the Last Price for 7/14 of 60.75 with Strike 60 (Strike limited), net final position gain is $3117.12 or an ROO of 14.28%. This position will be assigned away at the end of the 7/21 cycle since Earning report is on 8/3.

Check for Gain and BreakEven Point::

As a check, for the above position, the Breakeven point is 52.207 per share after adding up all the options costs of $953.92 or 2.3848 per share. 54.592 Purchase price – 2.3848 Options = 52.207.

ROO Cost Basis is 54.592 = Purchase price for OTM trade.

Gain is 2 components. BEP to Purchase Price from Option income. and B. Upside potential from Purchase price to Strike.

A. Option Cost: (1 – (52.207 Breakeven / 54.592) Cost basis) = 4.3688%

B. Upside Potential: (60 / 54.592) -1 = 14.275%

Total ROO%Gain = A + B = 14.75% which was stated earlier.

Gain from the above is 54.952 Cost Basis * 400 Shares * 0.1475 (ROO%) = $3117.which agrees with gain stated earlier.

I was able to check out from the Broward County Library (Florida) the book by McMillan “Study Guide for Options as a Strategic Investment” Will comment on it after I do some reading.

The library in this area is a valuable free source for books. Great feature is you can keep checking out the same book as long as nobody else requests it. Been doing that for many years for various certifications and course requirements..

I have no clue what the study guide offers versus the book but I look forward to your comments. I picked up a few copies of the 3rd edition late last year for $3.59 apiece from Thrift Books as stocking stuffers. It kinda ruined the stockings :->)

I read the 4th edition and didn’t buy the 5th since at this point, I’m not looking to expand into the latest new exotic new products, etc. I’ know enough to be dangerous and there’s no need to exacerbate that. :->)

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Market Volatility and VIX-Based Exchange-Traded Notes February 17, 2018 Ask Alan #143 – How to Use In-The-Money Strikes February 14, 2018 Seeking the Highest Option Premiums is a Losing Strategy February 10, 2018 Rolling Option Considerations: A Real-Life Example with BEAT February 3, 2018 Setting Stop Loss Orders for Covered Call Writing January 27, 2018.

The New Stock Market - Algorithmic and High Speed Trading January 15, 2011 Options That Expire Weekly and Conventional Expiration Cycles September 26, 2010 Why the 3% Guideline Applies to Puts but Not to Call Options July 15, 2017 Earnings Pre-Announcements Explained and Categorized July 22, 2017 Tax Implications of Writing Covered Calls against Long-Term Holdings July 8, 2017.

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