Maybe I won’t meet your criteria for a big stock portfolio, but I am and plan to continue to mostly live off the (taxed) cash flow produced by my portfolio.
There will be years when I realize capital gains, but in most years they won’t exceed half of my net income. Actually, probably all years. So, never.
I know there’s more opinionated people on this forum in favor of strictly avoiding any taxes optimizing taxes, but to me it’s a fair deal that I benefit from a society that has provided the social environment to me for pursuing a lucky career and a business environment that allows me to benefit from companies in that environment that pay me the income I can live off.
Actually it is just the law here. I would not oppose to a capital gain tax. But not one that is subjectively raised by some tax sultans depending if they like your nose or not!
3 parts of my mechanical strategies depend on the Kreisschreiben 36 rules which were made exactly for the purpose of giving you some more objectivity:
I hold even losers for 6 months. That did lead to unnecessary losses.
I partly sell winners to lower the risk. Wouldn’t if I had to pay taxes.
I keep debt low, lower than my real estate tax value. With a capital gain tax I would only take out on raising the debt, like almost all rich people do where there is a capital gain tax.
With a capital tax I would optimize my strategies. I would have more risk and more debt and probably not pay much more tax. But I would need to know in advance.
You get between $0.25 and $1.05 per option contract for adding liquidity to BATS. What you get depends on the data price model. If it is “non-penny pilot” you actually get paid to trade. BATS, Better Alternative Trading System…
IB is the only broker I know that gives you back that money.
Long time no trade in future options. Was it a close long or open short? How much is 1.78 in Dollars (OK, I can find out that for myself, but while at it…).
So it’s a big trade? What’s the bet here? It seems a very unspectacular company.
And why do you have a 8-digit account number (that you include in your screenshot)?
ES’ earnings curve looks about as predictable as it gets (not sure what happened in 2005, but who cares), their dividend didn’t miss a beat (including 2005).
Sure, it’s not a growth stock, but it’s a reliable dividend payer & grower. Compound Dividend Growth Rate of about 8% over the past 20 years.
Reliable work horse in my portfolio.
I’ll soon buy back an OZK Jan 16 '26 37.5P (probably today or tomorrow, the order is already placed), which creates some free space in my Treasury Secured Put cash flow strategy.
ES seemed like a great candidate to fill that space and lit up somewhat red today so I pulled the trigger. The option sold translates to a little above the company’s current dividend yield on the money at risk (usually I aim for a fair bit more, but I haven’t seen anything interesting since UNH a short while ago). Together with that yield on the treasury (to secure this put) I’m scratching on 10% yield – which works for me.
The option already generated $33 book profits in the past 6 hours (which is about how much I spent on dinner at the Zürich Theaterspektakel this evening – that’s how to calculate properly with book profits, right?), but I’ll ride this out probably a few months to collect the time value until it’s worth … I don’t know. I count on @larix.aurea to remind me when it’s time to buy it back.
What’s the deal with 8 digit account numbers? Are there other lengths?
Ok, forget about account numbers. I realized I sabotaged my own question with that and don’t want to derail the topic. Just can’t help it, just noticed a deviation to what I’m used to.
The relevant question was about that trade, as an example. I do get the post was on trading cost, and have some amateur understanding on how I options work. I even passed the IB exam to trade those myself with some help of a popular search engine.
If I get it correctly, it’s based on your charts and development of general fundamentals, not deeper knowledge or assumptions about mid-term developments in the utility market where that company operates in?
What I was mainly curious about is if you (not you in particular, but any here doing trades like that, no matter the size) see in those charts, call it pattern recognition, or whether it’s rather a more less educated bet.
Nobody knows anything about the future, especially about the future of these companies, neither short-term nor mid-term nor long-term.
But if history is any guidance – and it seems to often rhyme with the present (and the future) – then this utility’s past earnings’ growth – and for me in particular: dividend growth – is what I like.
This feels like it warrants about a couple of pages of answering (which is just another way of saying there is not a short answer which is just another way of saying “I don’t really know”).
Here’s how I approach it:
there are companies that have grown their business reliably for decades.
Goofy looks at his puts sold in 2025: BIPC, CMCSA, MRK, OZK, UNH, SJM, LMT, now ES.
These companies mostly produce earnings curves like the one posted above, i.e. steady and growing, over decades.
Mr. Market on This Day decides that the stock price of a company is on sale for a discount of 5% or 10% for no particular reason (considering the criteria listed above)
market participants in said company want insurance that they can sell at a certain price in the future, 3 months out, 6 months out, a year out. The insurance price (for being able to sell in the future) is higher the more the price drops (on this day).
Goofy checks his parameters (securities available to back potential liabilities sold, whether he’s actually interested in buying the security he sells a put on, cash flow equivalent compared to owning the security outright, etc) and then maybe sells that Put to insecure holders of said company.
in most cases, 6 or 12 months down the road, those insurances sold expire worthless (or Goofy buys is back for a fraction of the price sold).
Again circling back to the Put sold today:
$178 for the obligation to buy 100 shares of ES for $55 by April 2026.
ES is a gread business, I’ve bought them for more than $55.
My premium (for the put sold) gets me about 5% on the capital at risk ($5500)
(My capital at risk is invested in US treasuries currently yielding somewhere between 4% and 5%)
So, I didn’t do this myself – Indianerehrenwort! – but I heard that you can ask AI the questions they ask and you’ll pass with honors.
At first, I was thinking, what is goofy doing wasting his time for $178, but when I run the numbers, you are right, the return is better than US treasuries.
I use about 37 bips of my liquid assets as collateral for options, so it’s really more of a hobby. I just like the cash flow it generates even if it’s tiny compared to divvies etc.
Also I try to clear out most if not all option holdings by year end to avoid waking up the tax lady when I submit my tax filing.
FOMO is after the fact, ROMO (my own creation) is before, that is an important difference…maybe 1000%…
This wouldn’t help with tax, as last year the tax lady wanted my complete broker statements even I explained before that I made more than 2000% on a single stock. She wanted the statements with all transactions on it. I suppose it was to check the Kreisschreiben 36 points…
OK, I could resolve all this by just spending more…
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