(08-31-2018, 09:03 AM)Kerim Wrote: I am really eager to start exploring this myself. Maybe we can trade insights and ideas. The first thing I want to understand, but haven't had time to research yet is tax treatment.
I assume that this is something you'd only want to do in a tax deferred account, as tracking and reporting the collection of premiums is not my idea of a good time. Am I correct to think that if I did this in an IRA, the premiums collected are not taxed (not now, I mean) and I wouldn't have to worry about tracking / reporting?
Unlike CCs, I see no real issue with this strategy in a taxable account. You make a hundred bucks on a premium and pay taxes. That seems better than not making the hundo in the first place? When I first started investing in the 80s, a wise accountant told yeah me taxes stink, but as far as investing is concerned, if you aren't worrying some about a tax problem then your investment decisions may need some improvement. I get it we should avoid taxes, but there is some wisdom in that advice.
The only thing I am sure of is never ever go long on a stock just because you like the option premium. It's an easy trap and it's just gambling. Learned that the hard way when the tech bubble crashed about 20 years ago. CCs are great until you lose your head chasing an option premium.