Options AKA Renting out shares.

[The Y-man]

Thanks for your replys. I have attempted to discuss the matter with my accountant and others and judging by the silence on the end of the phone or garbled answer on what options are and do i get the impression their face is something like this

i will keep looking for some answers on this. Get back to you all soon

OSS

The key will be which side of the grey line called "trader" you land on. e.g. if you were writing calls every month, would the ATO consider you a trader, or if you only wrote a few calls a year but this was the major source of income etc etc

Cheers,

The Y-man

 

[quoll]

Interesting

I was looking at options earlier this year but got scared off by some comments from others. I'm interested in what learning process those who are trading options have gone through?

Which books have you read?
What courses, if any?
How long did you paper trade?
What sort of $$ figures are we talking to make it worth while?

And the big question
Does it really give you enough cash to offset some of the shortfall from your rental properties?

Cheers
quoll

 

[The Y-man]

Which books have you read?
What courses, if any?
How long did you paper trade?
What sort of $$ figures are we talking to make it worth while?

And the big question
Does it really give you enough cash to offset some of the shortfall from your rental properties?

Cheers
quoll

Books: as mentioned elsewhere, Louise Bedford, Guy Bower

Courses: Peter Spann's Instant Income (now released under a different name - refer Freeman Fox site); also bought George Fontanill's Optionetics course - ok, but some techniques more suited to US market volumes

Paper trade - 3 months, then started with small outlay

Capital - depending on strategy, spreads may require only a few thousand (as collateral). Covered calls may need $10k+ to make up for relatively high brokerage and OCH fees (although more likely the figure is closer to 30~40k).

As to The Big Question: in practice, we have used it to supplement our "normal" trades, as we have not been able to consistently identify opportunities for trade. As to whether it could offset shortfalls, it depends on the shortfall concerned and the capital available to invest

Peter Spann suggested it would take you 5 years of trading options to become really proficient at it. We've only really been in the thick of things for about 2. I really couldn't give you our return figures either, as they are mixed into the "normal" share trades (long instrument).


Hope this gives some ideas.

Cheers,

The Y-man

 

[Panda]

Y-Man, are you using the covered call strategy? I got the impression that you are using a number of different techniques.


Panda

 

[The Y-man]

Y-Man, are you using the covered call strategy? I got the impression that you are using a number of different techniques.


Panda

As far options go, in the past year, we used covered calls on about 6~7 occasions, bear call spreads on about 2 or 3 (sorry, don't have notes here with me ).

Cheers,

The Y-man

 

[redwing]

Accountant

My accountant on the orther hand is very helpful as he invests in futures and has done so for 7-8 years spending about $25k on educating himself..

REDWING

 

[Ol School Skata]

Books read - anything i could get my hands on Louise Bedford - Writing Options, Guy Bower, ASX material i find is good, posts on this and other websites.

Courses - ASX courses online and evening seminars, Spanny's Instant Income,

Paper Traded for about 2 years - did not have the necessary spare capital to write covered calls.

Does it pay for neg geared props. Yes and no - for the majority of the months i have written calls yes - except for the month where i had to buy back my position - but the share increased in value so i guess counter balanced out. I have one neg geared place and one pos cashflow set of units. My objective in writing CC's now was not solely to cover neg geared costs, it was a learning objective - to learn in the actual market but my premium have paid for the neg geared property and covered brokerage, OCH Fees and Interest costs. Only commited a small amount of funds towards it $20K so far.

My average premium received after brokerage, OCH fees is about 2% a month of capital invested (purchase price of shares and brokerage). Some months i only received 1% others, like this last month 4% net costs - but the share price has risen above my exercise price...so will wait to see what happens later this month. if i get exercised i am happy with that.

I have been considering changing my strategy to writing puts (using cash as collateral) or doing straddles.....just researching these now

OSS

 

[Panda]

"Spanny's Instant Income"

Whats this? I presume Peter Spann. Is "Instant Income" a book or course? Was it any good?

Thanks,

Panda

 

[geoffw]

"Spanny's Instant Income"

Whats this? I presume Peter Spann. Is "Instant Income" a book or course? Was it any good?

Panda

Yes, Peter Spann.

It was a course, and it is very good.

I understand a share course is coming out at some stage.

 

[The Y-man]

"Spanny's Instant Income"

Whats this? I presume Peter Spann. Is "Instant Income" a book or course? Was it any good?

Thanks,

Panda

Course. Check http://www.freemanfox.com.au/frame.asp?mainFrame=/seminars/page3c1.asp

(assuming contets has not changed drastically?)

Cheers,

The Y-man

 

[Panda]

Sorry for all the questions.

I was just wondering what areas the course covers? (like property and stocks only?, business, entreprenueship etc??

And most importantly why is it good? Was it value for money?


Thanks,
I'll stop asking questions soon


Panda

 

[quoll]

Thanks for the replies.

I'll change my mind and look into it more now.

Might start with the ASX online course.

Cheers
quoll

 

[The Y-man]

Sorry for all the questions.

I was just wondering what areas the course covers? (like property and stocks only?, business, entreprenueship etc??

And most importantly why is it good? Was it value for money?


Thanks,
I'll stop asking questions soon


Panda

Hi Panda,

The course covered options (hedging, call writing, spreads) and "investor psychology" / mindset.

I personally found it good value for money, however, I also know some people who got nothing out of it - it all depends on how you go and apply the info you get from the course.

Also note when I attended the course in 2000, I did it as part of the "Wealth Magic" series of Money Magic (which covered Property and Buy/Hold Shares) and Instand Income over a 4 day period.

The course is also available as CD's from Freeman Fox, however, I guess there is nothing quite like going to the real thing.

Hope this helps.

Cheers,

The Y-man

 

[Grego]

Would just like to add to what see change said. Reef capital is a great place to learn. I have thought about tinkering with options at various times even paper traded profitably for some time. However the more I reading at the "reef cap" forum the less I am interested in options. There are much better and safer ways to make as much if not more than trading options.
Hint... Look at anything on the forum by "Tech A"

Check out the following discussion, especially what Nick Radge has to say..

http://lightning.he.net/cgi-bin/suid/~reefcap/ultimatebb.cgi?ubb=get_topic;f=6;t=000156

Grego

 

[Ol School Skata]

Exercised

For those interested in the Covered Call Strategy to suppliment neg geared property...

For the month ending in August, I was exercised on my LHG Shares at $1.30. I had received an call option premium of 5c per share from writing. On the closing date (25th August), LHG shares closed at approx $1.345. i could have bought my position back but did not have the ability to monitor the shares and options on this date. I do not have a large number of shares or a large investment in this strategy (only 15000). This is my entry into this area so have committed a relatively small amount of funds to it.

I summary i received:

- 5c per share from the written call option for this month
- approx 29c per share capital gain from 5000 shares bought at $1.01 and 5c per share from 10000 shares bought at $1.25 - total capital gain approx $1950
- over the past year i have received on average 2.5c per share from call options or $375 per month gross - about $320 net costs.
This is the first time i have been exercised - but i did have to buy back my July options due to rise in share price

What will i do from here? I am considering writing put options to buy back the shares eg share price today could be $1.37 - i am considering writing Sept put options with an exercise price of $1.30. But am yet to finalise this. Writing put options provides a similar pay off to the covered call strategy but with a risk of early exercise. Will let you all know soon what i decide to do

For those interested - I hope the helps a little

OSS

 

[redwing]

Hi OSS..

How have you been going with this strategy?

I've just finished listening to Peter Spanns instant income/wealth magic CD's again, plus i got a free copy of Jamie McIntyres book at the Perth Expo and when i hit the 'renting shares' part it got me thinking again..

Is anyone still employing this strategy with sucess in the current market?

How has it panned out?

There seem to be a lot of Peter Spann devotee's here, however, are any of them using any of Peters other strategies..or just staying with IP's?

Curious..