Don't Make This Cash-Secured Puts Mistake

[@StockandOptionMyLifeOfLearning]

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[@mikesurel5040]

Fidelity's default, I think, is to hold your cash in their money market fund, which is not as high as the funds here, but it is over 4% still and no muss no fuss.

[@lenman9013]

Fidelity is currently 4.3% in MM.

[@davidleonard4925]

Money market with them is not the default unless you request it be.

[@CalmerThanYouAre1]

Spot on! 💯 I use SGOV exactly the same way. 5% on SGOV and 12-20% on the CSPs I’m using SGOV to collateralize, liquidating as needed if I take assignment of any shares.

[@StockandOptionMyLifeOfLearning]

Thanks for sharing

[@derek6947]

I’ve been doing this for a couple years now. Two additional benefits. One, if you trade on margin like I do owning BIL or SGOV reduces your available margin and helps keep you from over trading your account. Two, you can designate different funds for different purposes. I use BIL to hold my cash for CSP but I use SGOV to hold my cash that I put aside for taxes. Great video!

[@StockandOptionMyLifeOfLearning]

Thank you for sharing

[@lenman9013]

In Schwab I just park the cash in a money market fund (SWVXX). Schwab counts it as collateral for secured puts. I just sell one day ahead if it looks like one of my puts will get assigned.

[@tripphazzard6679]

didnt know this was a thing thanks for the tip. time to make that juicy interest now on the account (reg portfolio and IRAs)

[@thomasd5488]

I just learned about SWVXX 3 months ago. Selling CSP's and holding the cash in SWVXX, feels like double dipping, and I'm OK with that. When I think about all the interest I left on the table using bank sweeps, I SMH. PS: If it looks like an in the money CSP will be assigned. I avoid assignment, and earn more premium, by rolling out to a far enough away expiration, that earns a net credit. I get PAID to avoid assignment.

[@mateeeoooesc]

@@thomasd5488 how far out do you set your DTE. I’m new to trading. I see doing CSP as a way to collect premium on stocks I want to own in the future at a lower price. Any other tips/advice?

[@charlesbrenneman4150]

Love this! Great info as usual!

[@StockandOptionMyLifeOfLearning]

Glad it was helpful!

[@cfb7000]

This is Gold...... never thought about this....

[@mikelong9638]

Randy, What great idea! Thanks

[@StockandOptionMyLifeOfLearning]

You are very welcome

[@mikecav7399]

Great video, very informative!

[@StockandOptionMyLifeOfLearning]

Thank you!

[@mikem511]

thanks great advice

[@StockandOptionMyLifeOfLearning]

You're welcome!

[@1879gym]

Thanks, I appreciate real information and you're it!

[@StockandOptionMyLifeOfLearning]

I appreciate that!

[@johnl4235]

just brockerages like fidelity, or schwab, where it just sits in there collects the interest while doing options

[@RC-ob6in]

Randy, thank you very much for your videos. ! great content as always ! we appreciated !

[@StockandOptionMyLifeOfLearning]

I appreciate that!

[@johnpinard3212]

Fidelity “core” position is a money market. I sell a lot of cash secured puts and I have all the “cash” in the money market. Making a little north of 4 percent.

[@ChannelSyxx]

That’s why I moved to Fidelity.

[@vincenttoh5807]

Thank Randy. This video makes me relook at how to earn more on the cash sitting in my account and not just earning the paltry amount from IBKR now.

[@Crappie_Hunter_Seeker]

Well you have gone and schooled me again ! Thank you for that information ! Very helpful.

[@StockandOptionMyLifeOfLearning]

Glad to help

[@andresvegajaramillo]

I use BOXX which does not give dividends, and help me with fiscal topics. Thank you for this video!!!

[@StockandOptionMyLifeOfLearning]

Thank you very much for sharing that! That is an interesting way to play it. Box spreads can be, a little challenging to deal with at times, so it's nice to let someone else do the work, for a fee.

[@lin-joglobal769]

Can you do a CSP challenge. May with 25000 account or smaller. Thanks

[@StockandOptionMyLifeOfLearning]

Thank you for the suggestion. I do have a smaller account that is now worth around $48k that I share with my Patreons.

[@brianhowell988]

Thank you for all your information!

[@hmkjr]

I use BOXX

[@barryinny]

I use BOXX at Tasty. I believe the tax advantages of BOXX is like a futures contract - 60% LT/40% ST....

[@leny7829]

Been more aggressive using covered call ETFs that pay weekly. Sure, some NAV erosion but generally offset by the much higher payout. Wouldn't recommend 100% as I still use SGOV and money market too at times.

[@StockandOptionMyLifeOfLearning]

Thank you for sharing

[@asankaamarasekara8539]

Hi, Thanks for the informative video. As I understand, SGOV pays monthly interest as a dividend. Will the broker deduct 30% tax on this? Please let me know. Thank you.

[@StockandOptionMyLifeOfLearning]

They don’t in my account but you might message your broker to make confirm how they will handle it in your account.

[@travismartinson1813]

I like to use TFLO and USFR. With floating rate funds, you have no interest rate risk and still receive around 5%.

[@StockandOptionMyLifeOfLearning]

Thank you very much for sharing those! They look interesting also.

[@lin-joglobal769]

Fidelity is the best. Robinhood gold is the way to go.

[@rebelliontotyrantsisobedie5602]

CSHI is another from NEOs that yields 5.8%

[@flipsaug]

Robinhood Gold

[@citizenm9590]

Does Interactive Brokers automatically pays interst on your cash? If they do so is it still better to buy the SGOV or BIL etf to earn more interest?

[@vincenttoh5807]

IBKR’s interest is tiered. It pays zero interest if you have less than 10,000 USD in cash and NAV more than 50,000. So SGOV is still the best option for small accounts.

[@StockandOptionMyLifeOfLearning]

Currently IBKR clients with a NAV of more than USD 100,000 earn an annual rate of 4.08% on their USD cash balances above USD 10,000. IBKR clients with a NAV of less than USD 100,000 will receive a lower annual rate, this rate increases the closer your NAV is to USD 100,000. Interest will not be payable on the first USD 10,000 of uninvested cash balances. Here's a link to IBKR's tiered interest rates: www.interactivebrokers.com/en/accounts/fees/pricing-interest-rates.php?gclid=Cj0KCQiAuou6BhDhARIsAIfgrn7g5l_RsPYhM_hagz-HYMIkab4HpkpZJE-lHbUF53Hxc4YrnBW3DToaAmYUEALw_wcB

[@citizenm9590]

@vincenttoh5807 if you have $100K would you say that's small account and what is the best bang for your money SVGO or BIL?

[@josephsaeteurn9158]

i have a margin account.. with 100K buying power.. i sell CSP to collect weekly premiums.. i pay $0 interest to use 30K collateral.. and i collected $400 premiums.. this is hack code.

[@williammckenney3590]

I’ve been buying and selling options and any profits go towards buying ETFs. I do this so I only have a small amount of account at risk at any one time.

[@barryinny]

I don't see where buying the ETF affects your risk? Your risk is based on what/how many of those options you are selling...

[@donnyh3497]

But don't you have to pay a lot of interest on the margin that you are using? I don't really understand how margin works

[@StockandOptionMyLifeOfLearning]

Here are 2 videos that will help: kzbin.info/www/bejne/joacfXlrgNKngJo and kzbin.info/www/bejne/jam6i4iYpLd9bJI

[@rboto7738]

Are you saying “cash cut put option” or “cash covered put option “ I can’t make it out what you are saying each time you say it

[@StockandOptionMyLifeOfLearning]

cash covered put option

[@leeh.6377]

I will not use margin...never make that mistake again

[@michaelwelch103]

5 dollar wide credit spreads do not bring in a not of cash, risk $400 to make $100

[@StockandOptionMyLifeOfLearning]

If your exit loss trigger is say, using your example, $100, then you actually would be getting a potential one to one risk to reward ratio. If though, you’re going to let it run to the $400 loss, then it might not be a desirable risk to reward ratio unless you are willing to buy the asset at the Short put option strike price.

[@schwingtrader6101]

Investing based on interest rates on your cash seems pretty ridiculous- never heard that strategy before and it’s obvious why

[@jb6278]

Clearly miss the point of this video!!! Never mentioned anything about investing based on interest rates. He asked 'what are u doing with the cash that is sitting Idle waiting to be invested?? is your broker paying u pennies on the dollar, and if so, u might want to consider this alternative option. Listening is sooooo underrated these days!!!

[@StockandOptionMyLifeOfLearning]

Humm... I'd suggest rewatching the video to get an accurate understanding of what it was actually about.

[@rebelliontotyrantsisobedie5602]

VUSXX & GABXX solid Mutual funds with .09% exp ratio

[@danc2207]

Great tip!