Covered call and put options

[gaijin]

I am trying to optimize my portfolio by selling covered call and put options on my existing position of VT. The idea is that the options never get exercised. I have both call and put options, so it's both selling and buying VT positions. If there is a risk that I get exercised, I will buy the option back.

Here's a screenshot of my current options positions. I would be curious to get your feedback on this strategy.

 

[Baptiste Wicht]

I am trying to optimize my portfolio by selling covered call and put options on my existing position of VT

Could you share more on your rationale? What do you want to achieve? More returns? Less risks?

 

[gaijin]

What do you want to achieve?

The idea is to have my existing portfolio work for me instead of just sitting around idle. So it's more returns with only little increased risk. I use items that I have already, thereby minimizing the risk. If I get exercised and have to sell VT, I can just buy it again. If I get exercised and have to buy VT, that's using money which is meant to buy VT anyway.

 

[Michael]

I have yet to find a good argument of why just holding VT (no puts/calls) should be worse if you believe in long term growth (with some volatility). If options are very unlikely to get executed you get lower premium. But unlikely is not impossible. I've read so many strategies where I first thought 'that makes sense!' and on the second thought I realized not touching puts/calls at all will likely be better for me in the end (I have no need of liquid income through premiums right now).

 

[Baptiste Wicht]

The idea is to have my existing portfolio work for me instead of just sitting around idle.

Does it not already work for you? The portfolio should generate capital gains and dividends.
You could also lend your shares (SYEP program in IB) and that would seem slightly less risky in my opinion.

As to your strategy, I can't really comment on it since I am far from an expert in options. But it seems like a fair use of options. I believe that Big ERN is doing similar (https://earlyretirementnow.com/options/), although this may be different.

 

[gaijin]

If options are very unlikely to get executed you get lower premium.

This is of course true. Lower is still better than zero. But you are right, I should get the details of how much I actually make of these premiums to make an informed risk assessment.

The portfolio should generate capital gains and dividends.

You are of course right, it already is working. So I guess it's about working as hard as possible

You could also lend your shares (SYEP program in IB) and that would seem slightly less risky in my opinion.

Less risky yes. But almost zero returns.