Options and real estate wedlock - a beginner level trade on a real estate backed asset

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stillpremed said:
UNH needs to close multiple weeks over 298 for strength

I used to do this: “ let me buy a stock that’s down 30% because I’m getting it at a discount! If I buy a strong stock, I may buy the top and then the bear market will wipe me out.”

Now I do: “ let me buy a stock that has amazing strength because I know the market is ripping with a lot of momentum and I’m capitalizing on strength. A weak stock may suck up my capital for the next 3 to 12 months - by that time the bull market may be over.”
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UNH needs to close above 269 for multiple weeks else we gravitate towards 243 and if that fails then 225 and then 215
 
Losing position with ATYR. I was up significantly, maybe 20% and against my better judgement decided to not sell and to in fact hold the position. Then I doubled down. Then Shkreli used his social media to get people to short the stock and now I'm down 10% It's honestly something I would have done in my rookie days. I've got a stop loss that hasn't triggered but it was just such a dumb trade and I had so many other better potentials. Now I remember why I hate biotech. Greed brings out my stupid.
 
Groove said:
Losing position with ATYR. I was up significantly, maybe 20% and against my better judgement decided to not sell and to in fact hold the position. Then I doubled down. Then Shkreli used his social media to get people to short the stock and now I'm down 10% It's honestly something I would have done in my rookie days. I've got a stop loss that hasn't triggered but it was just such a dumb trade and I had so many other better potentials. Now I remember why I hate biotech. Greed brings out my stupid.
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Don't be too harsh on yourself.

Yesterday I woke up in Panama city beach while enjoying a vacation, looked at my brokerage account and saw that I was 78% up in SOFI (78k profit) after they announced their earning. The stock went down today after they announced they are selling more shares for 1.5 billion. It's impossible to time that market.
 
stillpremed said:
UNH needs to close above 269 for multiple weeks else we gravitate towards 243 and if that fails then 225 and then 215
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Why would it go down to 215. They have a historical PE (TTM) average of 22. Over the past 10 years the minimum has 15, the max was 37.

Right now TTM PE is 11.

There needs to be a major catalyst for it to go to 215...which would give it a PE of 8.

More realistically we should look at future earnings. They are estimating "at least" 16 EPS for this year. Already have first two quarters in. So if they hit the target of 16, then their current forward PE is 16. If they have an EPS of 18...then their PE is 14.

They historically have PE anywhere from 20 - 35.

People need a little bit of patience with this company (and other ones in the space). Its not going to 350 this month. As I've said before the only real substantive risks to keep an eye out for this company are 1) booking fraud i.e Enron style, 2) huge lawsuits from the government, and 3) a meaningful change in how all of health care is delivered in the US.

I don't think #1 exists.
The majority of #2 is already priced in. The way all these things work out too is if they are found guilty 4-5 years later, they will pay a fine of several billion dollars. The moment that is announced, the stock will go UP.
For #3, there is just a very low chance of anything major to occur with. There will be a hundred billion cut here and there, but we would need something like a single payer system to completely disrupt the health care industry.
 
I love playing options. Made me a millionaire at age 34. Bought these last week and sold 3 days ago. Just put 500k again in AMD and 400k in SMCI for November call options yesterday 7/30. Lets see how much they pay given the overnight movement.

Its kinda sad many of my colleagues who are physicians are very risk averse and rather be wage slaves for an extra 10 years. Can't be me in this bull market.

I never buy Service industry, Fast food, healthcare, pharma or biotech stocks. Technology, and AI stocks is where the growth is at. Follow the money. Its easy.

Good stocks to invest in: SMCI, AMD, NVIDIA, TSSI, TSM, META, META. Hood and SOFi were good but they ran up too much before earnings imo.
 

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thegenius said:
I generally agree with all the AAPL comments above.

Therefore, I bought 5x Sept 220c. 🤣

AAPL has a chart that is primed to go higher. Regardless of the fundamentals.
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Apple will remain flat or go down. Investors look to see if the company will innovate or have strong growth. Apple is stagnate at this point.
 
twospadz said:
I love playing options. Made me a millionaire at age 34. Bought these last week and sold 3 days ago. Just put 500k again in AMD and 400k in SMCI for November call options yesterday 7/30. Lets see how much they pay given the overnight movement.

Its kinda sad many of my colleagues who are physicians are very risk averse and rather be wage slaves for an extra 10 years. Can't be me in this bull market.

I never buy Service industry, Fast food, healthcare, pharma or biotech stocks. Technology, and AI stocks is where the growth is at. Follow the money. Its easy.

Good stocks to invest in: SMCI, AMD, NVIDIA, TSSI, TSM, META, META. Hood and SOFi were good but they ran up too much before earnings imo.
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I am risk averse; however, I wish I understood option trading. Would not mind putting aside 5-7% of my brokerage account just to trade options

Can't wait for that day when I don't have to work because I need the money.
 
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Splenda88 said:
I am risk averse; however, I wish I understood option trading. Would not sign putting aside 5-7% of my brokerage account just to trade options

Can't wait for that day when I don't have to work because I need the money.
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It’s relatively easy. Buy contracts that are a couple months out and call options on a stock with momentum and good fundamentals like a tech or semiconductor stock. Instead of a 5% gain from the stock, the contract option will go up by 40%. It can work the opposite way for a loss. However, just buy long dated contracts so it has time to swing in your favor (3 month to 1 year).
 
TooMuchResearch said:
How much pl did you buy? I also have an allocation. I had a lot of rklb but sold off and now have some rklb.
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I didn’t play open but bought GoPro call options then sold them the next day for 150% gain. Put 10k and went up to 24k.

It’s wild that I bought kohl options 1 month before the meme crazy for 20k. I got tired of waiting for the short squeeze. Would have been 1 million if I held smh
 

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twospadz said:
I didn’t play open but bought GoPro call options then sold them the next day for 150% gain. Put 10k and went up to 24k.

It’s wild that I bought kohl options 1 month before the meme crazy for 20k. I got tired of waiting for the short squeeze. Would have been 1 million if I held smh
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What's your YTD return doing options?
 
twospadz said:
It’s relatively easy. Buy contracts that are a couple months out and call options on a stock with momentum and good fundamentals like a tech or semiconductor stock. Instead of a 5% gain from the stock, the contract option will go up by 40%. It can work the opposite way for a loss. However, just buy long dated contracts so it has time to swing in your favor (3 month to 1 year).
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How are you determining position sizing? Are you doing calculations like break even point and watching Greeks and implied volatility or are you just going by feels? And what is your CAGR from options?

And if you’re heavy tech, were you getting killed earlier this year?
 
thegenius said:
Why would it go down to 215. They have a historical PE (TTM) average of 22. Over the past 10 years the minimum has 15, the max was 37.

Right now TTM PE is 11.

There needs to be a major catalyst for it to go to 215...which would give it a PE of 8.

More realistically we should look at future earnings. They are estimating "at least" 16 EPS for this year. Already have first two quarters in. So if they hit the target of 16, then their current forward PE is 16. If they have an EPS of 18...then their PE is 14.

They historically have PE anywhere from 20 - 35.

People need a little bit of patience with this company (and other ones in the space). Its not going to 350 this month. As I've said before the only real substantive risks to keep an eye out for this company are 1) booking fraud i.e Enron style, 2) huge lawsuits from the government, and 3) a meaningful change in how all of health care is delivered in the US.

I don't think #1 exists.
The majority of #2 is already priced in. The way all these things work out too is if they are found guilty 4-5 years later, they will pay a fine of several billion dollars. The moment that is announced, the stock will go UP.
For #3, there is just a very low chance of anything major to occur with. There will be a hundred billion cut here and there, but we would need something like a single payer system to completely disrupt the health care industry.
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This is going to be utterly controversial AND unbelievable as I used to be a FA guy 100 percent…. Until I realized that none of that mattered and that’s the biggest reason why I wasn’t making money. Fundamentals don’t matter much as long as there is no fraud and company’s not going bankrupt. The story is in the technical analysis. Hold 225 and we don’t go to 215.

It’s like saying “why did UNH go from 630 to 255 and why is it dropping 1-3 percent a day relentlessly even though it’s TTM PE at an all time low at 11 despite XYZ fundamentals?”

It’s charts are so dang bearish and it’s telling us all we need to know about where the stock is going which is down IMO
 
twospadz said:
I love playing options. Made me a millionaire at age 34. Bought these last week and sold 3 days ago. Just put 500k again in AMD and 400k in SMCI for November call options yesterday 7/30. Lets see how much they pay given the overnight movement.

Its kinda sad many of my colleagues who are physicians are very risk averse and rather be wage slaves for an extra 10 years. Can't be me in this bull market.

I never buy Service industry, Fast food, healthcare, pharma or biotech stocks. Technology, and AI stocks is where the growth is at. Follow the money. Its easy.

Good stocks to invest in: SMCI, AMD, NVIDIA, TSSI, TSM, META, META. Hood and SOFi were good but they ran up too much before earnings imo.
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Tremendous!!
 
Splenda88 said:
I am risk averse; however, I wish I understood option trading. Would not mind putting aside 5-7% of my brokerage account just to trade options

Can't wait for that day when I don't have to work because I need the money.
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50 percent NW into BTC (as long as you buy within 30% of the bottom and sell within 30% of the top things that we don’t know until we retrospectively look at it) adds an extra zero to your NW every four years

And if that’s too “risky” then the gains won’t be there, you will quickly figure it out once you dip into the BTC world if that’s for you or not.

We are near the cycle top not the bottom so November 2026 I think will be an excellent time for me to get back in after I sell my stocks Q4 2025
 
stillpremed said:
50 percent NW into BTC (as long as you buy within 30% of the bottom and sell within 30% of the top things that we don’t know until we retrospectively look at it) adds an extra zero to your NW every four years

And if that’s too “risky” then the gains won’t be there, you will quickly figure it out once you dip into the BTC world if that’s for you or not.

We are near the cycle top not the bottom so November 2026 I think will be an excellent time for me to get back in after I sell my stocks Q4 2025
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It's very risky to have that much into BTC if you have a high NW (>1M)
 
Splenda88 said:
It's very risky to have that much into BTC if you have a high NW (>1M)
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Been doing it since 2018 and sleep like a doll. To each his own, works great for me.

2017: 50 percent
2018/2019: 95 percent
2022/2023: 99 percent (sold some in 2025 to buy a house in cash)

I will continue this for 2026. To me, it’s risky to not own BTC.
 
stillpremed said:
50 percent NW into BTC (as long as you buy within 30% of the bottom and sell within 30% of the top things that we don’t know until we retrospectively look at it) adds an extra zero to your NW every four years

And if that’s too “risky” then the gains won’t be there, you will quickly figure it out once you dip into the BTC world if that’s for you or not.

We are near the cycle top not the bottom so November 2026 I think will be an excellent time for me to get back in after I sell my stocks Q4 2025
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I have never sold a single satoshi, and never will for the next 12 years. Stack sats, stay humble, stick to the plan.
 
Option fan bois, can you comment on AI answer to my question?

—-

Question: so which outperforms over 5 years or more: options trading or indexing in S&P 500?

Answer:
Over periods of 5 years or more, S&P 500 indexing has reliably outperformed most options trading strategies—especially those that attempt to generate long-term leverage or speculate on direction—when considering return, risk, and consistency.


Key context and evidence:

  • The S&P 500 index delivered an average annual return of about 13.6% (2019–2024) and roughly 10–11% annualized across various multi-year periods before inflation. This performance compounds reliably over long-term horizons.
  • Conservative option strategies (like covered calls and put-writing) may produce comparable or even slightly higher risk-adjusted returns versus the S&P 500, but with reduced volatility—these do not produce leveraged returns and mainly reduce risk or enhance income. Over 5+ years, they rarely beat the S&P 500 in absolute (total) returns and instead provide smoother return patterns.
  • Aggressive leveraged options trading(such as buying calls to mirror or amplify index returns) almost always underperforms indexing over 5+ years for retail investors. This is due to:
    • Option decay (theta), where calls/long-dated options lose value over time if the market does not move sharply up.
    • Transaction costs and imperfect execution.
    • Volatility drag: Although leveraged products may outperform during sustained bull runs, frequent rebalancing and compounding of volatility erode gains over multi-year horizons.
  • There is no academic evidence or industry study demonstrating that option trading strategies outperform the S&P 500 index on an absolute or risk-adjusted basis over long periods(5+ years) except in the context of income-focused, risk-reducing strategies—never for leveraged or speculative trading.
In conclusion: Indexing in the S&P 500 outperforms option trading strategies, especially leveraged options, over periods of 5 years or more for the vast majority of investors. Option strategies may reduce risk or match returns with less volatility but do not consistently beat indexing in total performance over long horizons.


No evidence exists of systematic outperformance by options trading compared to simple S&P 500 indexing over 5-year periods or longer.

—-

If that is the case, why engage in options with all the headwinds: more time spent managing the trades, option fees, theta decay, higher taxes for those with realized gains, tax complexity (e.g. trying to meet safe harbor).
 
AD04 said:
Option fan bois, can you comment on AI answer to my question?
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Let me start.

The way you asked this question tells me everything about how you don't understand the question you asked, and likely have an extremely rudimentary understanding of the options.

Options aren't a "stock" to invest in, and there are an INFINITE amount of ways to use options to make money in any given market, using any given underlying, at any given time.

Your question is like asking "which one is better, chinese food or japanese food?"
 
HemorrhagicShock said:
Let me start.

The way you asked this question tells me everything about how you don't understand the question you asked, and likely have an extremely rudimentary understanding of the options.

Options aren't a "stock" to invest in, and there are an INFINITE amount of ways to use options to make money in any given market, using any given underlying, at any given time.

Your question is like asking "which one is better, chinese food or japanese food?"
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I have made clear multiple times in this thread that I do NOT understand options at all. Hence, I don't even try to dabble into that world.

I don't even know how to put an option order. I don't even activate that 'option' in my Fidelity.
 
Splenda88 said:
I have made clear multiple times in this thread that I do NOT understand options at all. Hence, I don't even try to dabble into that world.

I don't even know how to put an option order. I don't even activate that 'option' in my Fidelity.
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You don't have to; it's not required knowledge by any means.

This is why the advice of "DCA into index ETFs" is the best approach for 99% of people who are interested in allocating to US equities.

I would never recommend options to anybody as a way to make money or invest more wisely or hedge positions or make income off a large stock portfolio etc etc. I think it's too hard and too complicated for most people.

However, I will 100% attack the idea that you can't beat the market with options. It's simply not true, many in this VERY THREAD are doing exactly that.
 
HemorrhagicShock said:
Let me start.

The way you asked this question tells me everything about how you don't understand the question you asked, and likely have an extremely rudimentary understanding of the options.

Options aren't a "stock" to invest in, and there are an INFINITE amount of ways to use options to make money in any given market, using any given underlying, at any given time.

Your question is like asking "which one is better, chinese food or japanese food?"
Click to expand...

So you didn’t address the headwinds for options trading. So explain to me in rudimentary terms why options given the headwinds? Maybe I know more than you think and maybe I’m outperforming you.

Do you think buying calls of NVDA and outperforming S&P 500 is from your options trading skills over stock picking skills?

What has been your after-tax CAGR with options and how does it compare to buy and hold of the same underlying asset
 
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Well I closed my UNH long dates contracts. I kept my shares. I sold even my leaps going out 1.5 years. This is right after my post above supporting it. I still do, and I don't mind waiting with shares. I'll get back in later. Part of it is psychological as I hate seeing -40%, -35%, -55% on these contracts.

I agree with above that TA dictates near term movements, however FA is what moves companies over many years. It's not TA. In the near term the stock market is a voting machine. But in the long term it rewards companies with good fundamentals.
 
stillpremed said:
This is going to be utterly controversial AND unbelievable as I used to be a FA guy 100 percent…. Until I realized that none of that mattered and that’s the biggest reason why I wasn’t making money. Fundamentals don’t matter much as long as there is no fraud and company’s not going bankrupt. The story is in the technical analysis. Hold 225 and we don’t go to 215.

It’s like saying “why did UNH go from 630 to 255 and why is it dropping 1-3 percent a day relentlessly even though it’s TTM PE at an all time low at 11 despite XYZ fundamentals?”

It’s charts are so dang bearish and it’s telling us all we need to know about where the stock is going which is down IMO
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It's fine to be both, don't have to be 100% one way or another. TA works becasue there is ample evidence that momentum moves stocks, supports and resistances lines actually work (more often than not), you can't make up things like supports at AVWAPs and fib levels and things like that.
 
AD04 said:
So you didn’t address the headwinds for options trading. So explain to me in rudimentary terms why options given the headwinds? Maybe I know more than you think and maybe I’m outperforming you.

Do you think buying calls of NVDA and outperforming S&P 500 is from your options trading skills over stock picking skills?

What has been your after-tax CAGR with options and how does it compare to buy and hold of the same underlying asset
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1) I don't consider any of the headwinds you listed to be headwinds, which makes your 'why options" question irrelevant. I like doing this stuff far more than I like the day-to-day as a physician.

2) It's not an either/or, it's both. This should be implied. If you have a sound thesis with conviction on the underlying, then options are a TOOL via which you can outperform buy and hold. I can simultaneously load up on "safe" calls with reasonable strikes/expiries on NVDA during a dip/correction, and "spread" them once price has recovered to lock in profits, all while still selling far OTM calls on a portion of that NVDA position, collecting income. It's should be painfully obvious how this results in outperformance. I honestly don't get why everybody isn't doing this.

3) I don't even know, but my total liquid networth is up more than what I would have by simply DCAing into VOO/SPY since COVID started (which, again, is a GREAT strategy for 99% of people)
 
thegenius said:
All three of those you bought have earnings in the next 7 days. were these bought for earnings or due to a triggered TA alert?
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They met my TA criteria. I honestly don't pay much attention to earnings unless the stock has really predictable movement post earnings. I just go with the TA and set the stop losses at strong support levels and earnings be damned.

3 stops is my daily max. If I had triggered a 4th stop in the same day, I would have given myself a 3 day pause before placing any trades.
 
HemorrhagicShock said:
1) I don't consider any of the headwinds you listed to be headwinds, which makes your 'why options" question irrelevant. I like doing this stuff far more than I like the day-to-day as a physician.

2) It's not an either/or, it's both. This should be implied. If you have a sound thesis with conviction on the underlying, then options are a TOOL via which you can outperform buy and hold. I can simultaneously load up on "safe" calls with reasonable strikes/expiries on NVDA during a dip/correction, and "spread" them once price has recovered to lock in profits, all while still selling far OTM calls on a portion of that NVDA position, collecting income. It's should be painfully obvious how this results in outperformance. I honestly don't get why everybody isn't doing this.

3) I don't even know, but my total liquid networth is up more than what I would have by simply DCAing into VOO/SPY since COVID started (which, again, is a GREAT strategy for 99% of people)
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When I responded yesterday, I was between patients on a smart phone so I couldn't be as detailed as I would have liked. I didn't mean to sound antagonistic. I was hoping you'll flex on me and I was hoping you'll school me so I can learn something new. I love it when there are people better than me that can teach me something.

Fair enough. If you enjoy it, then you enjoy it so the time spent isn't a cost for you. But option fees, theta decay (for buyers of options), higher taxes for those with realized gains, tax complexity (e.g. trying to meet safe harbor) are definitely headwinds.

Shorting or longing a particular equity isn't unique to options. When you (going forward, this is a general you and not @HemorrhagicShock) break down options by first-principles basis, assuming you are buying a call (which most posters here seems to be doing), you're taking on leverage at cost of implied volatility and theta decay and option expenses. If you can nail the direction of the price and amplitude of the change and the timing of the change, you can make a lot. But if you get any of those wrong, you can lose money. Sometimes a lot of money. Of course there are hedging techniques or just selling puts and collecting premium (like @cyanide12345678) to make options less risky.

Options can slow the growth of wealth. For example, these are the CAGR (pre-tax and including dividend reinvested) of the following from 06/01/20 - 07/31/25:
- SPY (index S&P 500) - 16.83%
- WTPI (systematically selling puts on S&P 500 with cash reserve held in short-term treasuries) - 12.25%
- JEPI (actively managed proxy of S&P 500 and selling calls on it) - 11.08%

WTPI and JEPI have worse tax treatments than SPY due to the nature of how they generate returns.

I think it is wise to take on leverage if you know what you're doing. But if you don't, you can destroy your net worth. Yes, options is a tool but it should be one of many tools. There are other forms of leverage that would have less headwinds, but less explosive upsides and downsides.

---

Anyways, I asked AI in think-hard mode the following:

you have $10k to invest. two strategies you can choose: 1) buy calls of sp 500 (you can choose your own strike and expiration date and if you roll over contract or not) vs 2) buy spy etf. your goal is to maximize performance over 10 years. you don't have to invest all $10k. you can store cash in reserves for future investment. if you choose option 1, you must stick with option 1 throughout the length of the trial. same for option 2. there is no other source of income. you are subject to US federal taxation rates of max capital gains rates and NIIT and state income tax of 5% every year if you sell and make a profit. if you sell and have a loss, you can reduce taxable income up to some cap as specified by IRS. what would you do to maximize return?

Answer:

To maximize the return on a $10,000 investment over a 10-year period, I need to choose between two strategies: (1) buying call options on the S&P 500, where I can select the strike price, expiration date, and whether to roll over the contracts, or (2) buying the SPY ETF, which tracks the S&P 500 index. I must stick with the chosen strategy for the entire 10 years, but I don’t have to invest the full $10,000 immediately—I can keep some cash in reserve. The decision must account for U.S. federal capital gains taxes (up to 20%), the Net Investment Income Tax (NIIT) of 3.8%, and a state income tax of 5%, applied to profits when I sell. If I incur losses, I can offset taxable income up to the IRS cap of $3,000 per year, carrying forward any excess losses. With no other income sources, my goal is to maximize performance over the decade. Here’s my analysis and decision.

Understanding the Strategies

Strategy 1: Buying Call Options on the S&P 500
A call option gives me the right to buy the S&P 500 at a specific strike price by an expiration date. The leverage inherent in options can amplify gains if the index rises significantly above the strike price. For example, I could buy long-term options (e.g., 2- or 3-year expirations) and roll them over by selling before expiration and purchasing new contracts. However, if the S&P 500 doesn’t exceed the strike price by expiration, the option expires worthless, and I lose the premium paid. Premiums are a significant cost, influenced by factors like time to expiration and market volatility, and time decay reduces the option’s value as expiration nears.

Strategy 2: Buying the SPY ETF
The SPY ETF mirrors the S&P 500’s performance, offering a straightforward investment with returns tied to the index’s growth, historically averaging around 10% annually over the long term (including dividends). It carries lower risk than options since I own the asset outright, avoiding the total loss potential of expiring options. SPY has a low expense ratio (0.09%) and pays dividends, which I can reinvest to compound returns.

Comparing Returns, Risks, and Costs

Potential Returns
  • Options: Leverage can lead to outsized gains. For instance, if I buy a 2-year at-the-money call option on SPY (assume SPY at $400, strike $400), the premium might be around $40 per share, or $4,000 per contract (100 shares). With $10,000, I could buy two contracts for $8,000. If SPY rises to $450 in two years, the options are worth $5,000 each, totaling $10,000—a $2,000 profit (25% return over two years). In contrast, $10,000 in SPY (25 shares) would grow to $11,250, a $1,250 profit (12.5%). Options win here, but only if the market rises sufficiently.
  • SPY ETF: Returns match the S&P 500’s growth. Assuming an 8-10% annualized return (conservative estimate), $10,000 could grow to $21,589-$25,937 over 10 years with dividends reinvested, without the need for active management.
Risks
  • Options: High risk due to potential total loss of the premium if the S&P 500 doesn’t rise above the strike price. Rolling over every 2-3 years (e.g., three rollovers in 10 years for 3-year LEAPS) means repeated exposure to this risk. A flat or declining market could wipe out the investment multiple times.
  • SPY ETF: Lower risk, as the investment retains value unless the S&P 500 collapses entirely (unlikely). Volatility is weathered over the long term, and historical data shows most 10-year periods yield positive returns.
Costs
  • Options: Premiums are a recurring expense. A 2-year option might cost 10-15% of the underlying value (e.g., $4,000-$6,000 per contract), and rolling over every 2-3 years multiplies this cost. Transaction fees may also apply.
  • SPY ETF: Minimal costs with a 0.09% expense ratio ($9/year on $10,000), plus no need to roll over or pay premiums.
Tax Implications
  • Gains: Profits from either strategy, when realized, face a maximum tax rate of 28.8% (20% federal + 3.8% NIIT + 5% state) if held over a year (long-term capital gains). Short-term gains (under a year) are taxed as ordinary income, likely higher, but I’ll assume long-term treatment where possible.
  • Options: Rolling over options every 2-3 years means realizing gains or losses more frequently. A gain (e.g., $2,000) incurs $576 in taxes, leaving less to reinvest. Losses offset up to $3,000 of taxable income annually, but with no other income, excess losses carry forward, delaying benefits.
  • SPY ETF: Holding for 10 years defers taxes until the end. A $15,000 gain in 2033 incurs $4,320 in taxes, but the full amount compounds tax-free until then, enhancing growth.
Scenarios Over 10 Years
  • Strong Market (e.g., 10% annual growth): SPY grows $10,000 to $25,937; after 28.8% tax on $15,937, I net $21,347. Options could amplify returns if timed well, but premiums and rollovers (e.g., $4,000 every 2 years) might erode gains, and mistiming could lead to losses.
  • Volatile Market: SPY rides out fluctuations, likely ending higher after 10 years. Options risk expiring worthless in flat periods, compounding losses with each rollover.
  • Declining Market: SPY retains some value; options likely expire worthless, losing the full premium repeatedly.
Cash Reserves Consideration
I could invest less than $10,000 and hold cash, but in a low-interest environment, cash earns minimal returns (e.g., 2% annually), underperforming the S&P 500’s long-term growth. For options, cash could fund future premiums, but this requires market timing—a risky proposition. Fully investing maximizes exposure to growth.

Decision
The SPY ETF offers a compelling balance of solid returns, lower risk, minimal costs, and tax efficiency over 10 years. Historical S&P 500 performance suggests positive long-term growth, and dividends enhance compounding. Options, while offering leverage, carry high risks of loss, significant costs from premiums and rollovers, and tax disadvantages due to frequent realizations. Without expertise in options trading or a strong belief in outsized market gains, the ETF is safer and more likely to maximize returns.
Thus, I would buy the SPY ETF with the entire $10,000 and hold it for 10 years. This leverages the S&P 500’s long-term growth, minimizes costs and risks, and defers taxes, optimizing my return on investment.

---

AI did a pretty good job of thinking this out in first principles basis.

@HemorrhagicShock Your stock picks are on point. Making big money means getting to tech / AI or crypto. So I'm not surprised you did better than S&P 500. Keep up the good work.
 
Last edited:
Bloody day today. Amazon is on sale. You think Jeffy sold more stock?

I think he told his finance Bros to keep the stock flat this year.
 
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