Selling deep in the money calls on Margin stocks
Feb 24
33 Comments
Margin interest is 6-7% and 4% if you borrow more than million . Monthly calls deep in the money blue chips - say microsoft will generate 10% . So say MSFT 250 C April 14 is 48.30 meaning 4$ per stock per 48 days . Translate to >10% annual and I risk only if MSFT dips below 250 in next 48 days . If not I dispose the stocks and keep 48.30 per stock beforehand . Subtracting interest 7 or 4% depending on amount , I still have guaranteed 3% or 6% return from the money I never had in my account . It’s all margin money . What is the catch ? And why should not I do it ?#personalfinance #investments
comments
It makes sense, and I realized that I slightly misread your first comment too.
Think covid crash or yesterdays Russian market crash or future crash for <whatever reason>.
Would you want to be in a $1 mn debt ?