![]() Here are a few more observations from the CY 2022 return chart: So far, it’s looking promising, +3.22% during the first week of 2023.ĬY 2022 total return comparison: ERN Put Writing vs. But it cannot save you when the overall market is so uncooperative. So, the options trading made the loss slightly less painful. That 16% loss for the fixed-income portfolio is roughly what you’d expect, considering that all major asset classes were down by double digits that year: stocks, Treasury bonds, Corporate bonds, and preferred shares see the chart below. Without the options trading, I would have lost about 16%, so the options added about 4.7% return. The net-net: My total account was down by 11.6%. Then trade the put options on top of the existing portfolio to generate additional income. Currently, my Interactive Brokers account exclusively holds fixed-income assets. You can use any stock, bond, ETF, or mutual fund portfolio. ![]() Again, if you’re unfamiliar with my options approach, you start with an existing portfolio that serves as collateral for the put trading on margin. More disappointing, though, was the meltdown of the underlying bond portfolio. ![]() Making money selling downside insurance on the index is still an achievement, considering the S&P went through a Bear Market in 2022. Some losses along the way pushed down the premium capture rate (PCR), i.e., the share of the gross option premium I keep as profit. But here’s the good news: I still made money from selling put options in 2022, just not as much as in previous years. Happy New Year, everyone! I haven’t written any updates on my put-writing strategy in a while, so I thought this is an excellent opportunity to review the year 2022 performance and some of the changes I have made since my last write-up in late 2021.Īfter three blockbuster years in a row, 2019-2021, I knew this sort of largesse would not last forever. ![]()
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