Interview #11 – Roadmap2Retire

The next interview is with R2R. He uses options  to supplement dividend income. Let’s get started

How did you get an interest in option trading?

I have always been intrigued by options trading as leveraged play on equities. I understood from the beginning that gains and losses were more pronounced with options. I knew of some people including family members who used option trading as an extra source of income. I have always wanted to learn about the process and benefit from it.

What actions did you take to learn on option trading?

Options are notorious in burning fresh/new traders and I was no different. I lost some of my money when I started. There were a few wins too, but it was more luck than anything. I decided to slow down, let the option strategies sink in over a period of months/years before I got more comfortable and figuring out what works for me.

What is your goal/ambition?

My goal with option trading is to supplement my passive income by writing calls. My assets are currently in tax sheltered accounts, so I am limited to the type of options I can trade. For now, covered call option writing is the way forward unless I move my assets (which I do not intend to).

How do you describe your style? Did this evolve over time?

I tried buying calls, puts directly and selling them after holding for a few days. Very soon, I realized that I didn’t understand them enough and decided to pause. I later learned how to trade options a bit more conservatively such as writing covered calls. For now, that is my main option strategy to generate income.

How much time do you spend on trading options?

I monitor my portfolio daily. If I see markets extend too much on a security I hold, I will write a covered call. It is my way of taking some profits off the table. It takes only a few minutes each week.

How do you deal with the risk that comes with option trading?

Since I stick to covered calls, my downside is limited — unless the underlying company tanks due to collapsing fundamentals. I usually tend to buy stocks and write covered calls on companies that I understand well (and well researched) and am comfortable holding for an extended duration.

What tools/sites/blogs/podcasts do you read on option trading?

I follow fellow bloggers such as Passive Income Pursuit, Options Hunting, Two Investing etc for ideas. Occasionally I will look at optionalpha.com to learn more, but I havent nearly spent enough time on it yet.

What is the size of your option trading account?

Undisclosed 🙂

Where do you get inspiration for trades?

Fellow bloggers as mentioned above. Also, staying up to date on the companies I own in my portfolio.

How do you track your trades and P&L? Where can we follow your results?

All trades are tracked in a spreadsheet I share on my blog. The page can be found here: http://roadmap2retire.com/options/

What is the worst trade ever you did?

Buying a VIX call a few years ago and holding it for a long time (about 3 weeks) and getting a real life lesson about time decay in options.

What is the best trade ever you did?

A series of trades buying call options on SPY during the QE days. The QE dates were pre-published by the Fed on the bond buying program with amount and schedule. Markets were going up on those days without fail. I used to buy SPY call options and hold them for a day to turn a quick profit.

Where/how can we follow your progress?

I share my trades on my blog: http://roadmap2retire.com/options/