The play money

The person that I am has a little dark side. This becomes visible in the need to for speed. I want to see that things move, that my actions create results, that things move. Not over the long term, but right here, right now!

And this is not in line with the general idea of long term investing that should lead to Financial Independence.

Welcome Play money!

Play money is a small part of my portfolio that is dedicated to trading, fast results and adrenaline rushes. By doing this, I can kept vast majority of my portfolio on autopilot.

My play money has 3 possible routes, each one has an options component.

  • Enhance dividends with options

In this case, I build up a position in stocks that are rock solid dividend payers. These stock should be the corner stone of my future dividend portfolio. Next to the dividend, options on these stock need to enhance my return. This are mainly covered calls. Sometimes put options, just to get my hands on these stock.

  • Get outright option premium

There really is no limit. Any stock will do. However, when writing put options, I have some rules in place. Over the past 6 months, I have also had some good learning experiences.

  • Betting that the stock will recover soon

This is more a contrarian view that I take. When everybody is selling, I will be buying. It could be a long time before the stock recovers. In the mean time, covered calls provide some income.

The 2015 results of my playmoney

At the start of this play money adventure, I had no real result in mind. I just wanted to learn options and have some fun with the markets. This portfolio represents less than 5 pct of my net worth. I do this as a safety measure: If I blow up here, the damage needs to be limited. An extra safety measure is that I often take stock that have a good dividend track record. These companies should be around also in 10, 20 and 30 years.

The table below shows the results of 2015


Let me explain a little the table

1- Premium

This is the amount of option premium I got on the options. This can either be a covered call or a cash secured put that I wrote. For 2015 I got 177 EUR and 89 USD. This gives an approx. EUR total of 257 EUR.

What stands out is the 7 euro I only made on RDSA in Q4 2015. This also covers a loss I made on a covered call. But this loss also represents a major learning I made.

I count the day that I close the position as the date that I make the profit.

2- Dividend

This is the net dividend that was sent to my account. I count the date of the arrival on my account as the date I earn the dividend.

As such, I received 93,28 EUR dividend. If 2016 is like 2015, this amount should more than double. I have second thoughts on RDSA, but only the future will tell.

3- Stock recovery

None of tis took place in 2015. Maybe in 2016

4-Conclusion: 350 EUR

In a half year, I earned 350 EUR with my play money. As I had no expectations other than break even, this is a great result. On top of that, I had some great options learnings. It sounds like something to continue in 2016.

The mid 2015 plan

In the course of 2015, I got the following idea: double my dividends received. This is the metric that you see next to the table. For that, I divide the dividends of a quarter by the amount of premium that quarter. The lower the better.

The total number in EUR looks really good. I almost made double as much in premium as in dividend. This looks great. Of course, this is a real short period and only relates to a a few dividend paying holding I have. Nevertheless, there was some great volatility end of August and in November. I was reassured that the strategy can work.

However, going forward in 2016, I will need to change my approach. Due to a really unique speculation tax, I will pay 33pct on profits made when I sell individual stocks and its derivatives sooner than 6 months. Losses can not be recovered (there is one minor exception). This kinda kills investing with options.

The good news: I can continue to do option investing on ETFs. So, this now becomes my new 2016 gameplay: repeat the above with ETFs. Lets see where it brings us and what tweaks the government will bring to the game.

Do you have some play money? 


6 thoughts on “The play money

  1. Hey ATL

    Congrats on your nice return in 2015 with your play money!
    As I don’t exactly know how options work, I don’t buy or sell it (I accept my margin of competence).
    Although I would like to have more insight in how options work exactly. For what I know, I think it’s a pity that you always need to find stocks between €1-20 because you trade in 100’s to maintain an acceptable amount of money. My budget doesn’t let me put options on for example AB Inbev, as it would be more then €10,000.



    1. Hey When do you retire,

      It took me a lot of reading and videos to get my head around options. I consider myself now an experienced novice, with still a lot to learn. Being curious as I am, this is a fun part. For your learning, you could start with some of my posts, the dig into tastytrade or another source.

      I look for stocks up to a range of 70 euros. This means that in case of the assignment of a put, I need to have 7K available. Quite a lot… Hence, I look for stock/trackers that are on my wishlist. this makes the “have to” part a little sweeter.
      I alos have a strict risk policy in the sense that I do not take more commitment than the cash available in my portfolio – excluding the emergency saving that I have. I do not use a margin account, as it then really looks like playing.




  2. We don’t have actual “play money”, simply because Mr. CF got burned badly back in 2009 with sprinters (leveraged stock), and we have no intention to repeat that or something similar.
    However, ABN Amro was a bit of a play, which worked out well and made +10% in a matter of weeks. But those chances don’t come along very often.


    1. Ouch… getting burned with Sprinters does not sound like a good thing.
      My palimony is – in my opinion – still very limited. It is invested in stocks that are a bet on the future in oil and gold. A part is in RDS.A…
      I stay away from leverage. For my options I do not use a real margin account and I have the cash for my puts available.
      Lets hope I don’t get burned.


  3. My entire portfolio is play money then. I think mathematically, the best returns for the least amount of effort will come from investing in US index funds and the S&P 500. I look forward to seeing your results for the play money 2016. 🙂


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