My 401k Questions Answered

Last week I had a lot of questions about how I make covered calls in my retirement account.

The process of setting up the call is the same as in my brokerage account, but my strategy is different.

How?

In my brokerage account, I like to make fast money and I don’t care if my stocks get bought away from me. I’m happy to sell the strike just above the cost of the shares and collect the biggest premium I can that day.

In my retirement account, however, I like to set up my calls so the stock can grow in capital gains as well as provide me income with premiums. I also try to collect dividends.

What does this look like?

I’ll show you exactly what I did with my own HD shares.

This is a long story, so bear with me!

I bought HD in early January 2023.

I did a strike price and a 3-week call for $138 in premium. My cost basis for the shares was about $355 per share since I had accumulated these shares over a long period.

The shares never were called away from me, and still haven’t been.

Here is a list of all the covered calls I did:

$99 for $340 SP 2/17/23

$402 for $340 SP 3/10/23

$236 for $315 SP 3/10/23

$150 for $310 sp 3/17/23

$240 for $310 SP 03/31/23

$218 for $315 SP 4/21/23

$100 for $300 sp 4/21/23 (rolled in)

$284 for $310 SP 5/26

$118 for $295 SP 5/26 (rolled in)

$118 for $315 sp 6/16

$253 for $325 SP 7/14

$130 for $320 sp 7/14 (rolled in)

$42 for $330 sp 8/11

$168 for 320 sp 10/20

I also collected $2.00 per share in dividends every quarter. That’s $400 so far this year off of my 100 shares.

The total premiums + dividends I collected during this year is: $3,096.00

This is money I made on a stock that would otherwise just be sitting there , going up and down. This is so much better than having an ETF to me! With the $3,096 I made, I used those premiums to buy other shares of stock that are “on-sale”.

By stacking the strategies of doing covered calls that allow room for the stock to rise, collecting dividends, and using the premiums to buy stocks when they dip, I feel like I’ve developed a system that is setting me up for good times in older age!