<p>US Savings I-Bonds</p>
<p>“The Series I bond rate for the next six months will be 3.06 percent, down from 4.60 percent for the previous six-month period. The inflation-protection bond is made up of two rates: a fixed rate for the life of the 30-year bond and an inflation rate that is adjusted every six months. The fixed rate remains set at zero, while the annualized inflation rate of the bond is 3.06 percent.”</p>
<p>Doesn’t look so great to me</p>
<p>Me neither. LOL. </p>
<p>But high yield is in the eye of the beholder. Got any better ideas with no risk to principal?</p>
<p>Why is the real rate of return zero on these I bonds?</p>
<p>Actually negative if you have to pay taxes…And these bonds remind me of a Woody Allen movie…you can only buy such small portions…</p>
<p>Ok I see this…</p>
<p><a href=“http://www.savings-bond-advisor.com/series-i-savings-bond-fixed-base-rates/[/url]”>http://www.savings-bond-advisor.com/series-i-savings-bond-fixed-base-rates/</a></p>
<p>I see real rates have been trending lower…I still don’t get why…unless the govt thinks alternative investments aren’t competitive. Or the demand is such…it doesn’t matter.</p>
<p>I don’t think that if you plan on living more than 10 years past retirement, it is wise to invest without risk - there are means of investing that provide a relatively good return without huge risk.</p>
<p>Selling premium?</p>
<p>As I mentioned earlier in this blog, that is one thing I do. Originally I used monthly options and now am using weekly options. I like to sell to the fools on the other side of the trade who have a probability of ~10% or less of ending in the money. If I lose, I’m buying the stock or index at a lower price where I would be glad to own it. This in combination with selling calls on the dividend stocks that I own have kept me positive throughout the year.</p>
<p>Ok…and what happens during a month like august…</p>
<p>Or a 2008?</p>
<p>Doesn’t bother you?</p>
<p>I don’t know about 2008 but I certainly did well in August - my best month yet - I love high implied volatility, it allows me to sell for the same amount at a much lower strike price so if I’m assigned (which I wasn’t), I’m really getting a bargain.</p>
<p>That’s good…</p>
<p>The only way that I lost out was that I wanted to buy spy etc at a low price. I sold OTM puts etc and spy never reached the price so I missed out on the huge runnup in October because all the puts I sold expired worthless.</p>
<p>I have a friend that sold in the spring and was waiting for 1,000 to get back in. We didn’t quite make it there but I think that it did hit its technical target.</p>
<p>Doct, That’s an issue with this strategy…</p>
<p>The strategy makes money most of the time…</p>
<p>But…it is easy to miss out on big moves on the upside…</p>
<p>And…if the issue drops thru multiple strikes…I think it is easy to get nervous…</p>
<p>When you are trying to make a buck or two and you are down 5 bucks…can definitely bring out some stress…</p>
<p>I sell a put with a 20 strike price…for a buck…and then the stock goes from 21 to 29…
Makes me wonder…hmmm…should have just bought the stock…</p>
<p>Having said this…I have engaged in your strategy quite a bit…but not with index options…</p>
<p>Remember index options are taxed at lower rates than equity options. Just remember if you have open positions in index options at the end of the tax year…you have to pay taxes on the paper profits…or you can write off the losses…which aren’t as good under the tax treatment of index options…</p>
<p>My boss and a friend sold otm puts in agq when silver was around 40 and dropping…</p>
<p>Kind of ruined their years…</p>
<p>Watch out for those leveraged etfs.</p>
<p>I’m happy that I don’t play with options - well, not directly anyways.</p>
<p>These guys were short the calls…and instead of just buying them in…they thought they would be clever and sell puts…</p>
<p>These guys should know better…they have traded a million times…</p>
<p>I only deal with stuff that I really understand - mainly spy, iwm, aapl and qqq - any of which I would like to own cheaply. I’ve traded slv and have generally been successful.</p>
<p>From my standpoint, it’s foolish to trade stock instead of options (DIM) as they have limited downside and unlimited upside. Options done correctly are significantly more conservative than owning stock. The only stock I own are those that have high dividends such as mo, vz, utx etc that I can sell monthly calls.</p>
<p>NLY uses leverage to turn a roughly 6% yield into a roughly 14% yield. They have a very clear explanation of what they are doing at the bottom of this page:</p>
<p>[Annaly</a> Capital Management, Inc. : Annaly’s Strategy](<a href=“http://www.annaly.com/site/strategy.aspx]Annaly”>http://www.annaly.com/site/strategy.aspx)</p>
<p>Note, they explain:
</p>
<p>As many have learned the hard way, leverage is a 2 edged sword and can work against you as dramatically as it works for you. I have heard NLY is well managed and they know what they are doing. I own a few shares to enhance the yield of my total portfolio (mix in a little 14% yield with the 4% yield) but I make sure it is a very small part of my total portfolio. Any investment adviser, as well as any CNBC talking head will warn you against dividend yields that are “too high” , ie they are high for a reason, and in many cases there is a good chance the dividend will be cut in the future.</p>
<p>I’ve owned from 0 to many thousands of shares - even when it dropped, the yield has more than made up for it. Currently I own a relatively small amount as I’m somewhat concerned (or don’t understand) with the nuances of operation twist.</p>
<p>Stocks are much more liquid the DIM calls…</p>
<p>If there is a dividend…you have to exercise the calls to get it…</p>