Cheapo Groovo

Another $206 Selling Puts and Calls

IRA Account
Regular Account

Boxing in my long stock position and making $298!

I also sold a June $26 put on UCO - oil could fall further due to the global slowdown.

The high dividend / covered call strategy in action

Covered Call Tutorial #investing #options #income

One of my best alternative income streams is selling covered calls. If you are unfamiliar with this strategy, the best tutorial I found is born to sell.

Recent Investment Moves

I'm not buying into the stock market rally.  Pumped up by the extension of payroll tax cuts, unemployment insurance, and central bank easing, the market cannot keep going up forever. Government debt (around the globe) cannot mathematically be paid back. So keeping interest rates artificailly low, government can roll over their debt, but this is simply life support for a terminal patient.

So I've been selling covered calls on $PFF at $39. Selling puts on $VXX at $20 and $18. And I just bought a little $REM.

Couch Potato Cash

I have yet to share all of my alternative income streams. I do this so you can realistically see what it takes and understand my philosophy of real diversification. **You can participate in these income streams by clicking them in my sidebar**

1. Utilizing my money seminars!
2. Teaching a few classes during the year.
3. Selling college textbooks on half.com & at Faculty Books.
4. Fiverr allows me to do small tasks (like clciking google ads) and earn $5.
5. Finding freebies and utilizing high-value coupons.
6. Collecting aluminum cans for scrap & the MI deposit.
7. Performing small tasks on Amazon Mechanical Turk.
8. Swagbucks ~ paid to search the Internet.

Hidden IRA Rules Limit Investment Choices

 

Mainstream media continues to state that traditional IRAs are tax deferred until retirement. Well, that depends. If your IRA owns mortgage-leveraged real estate, you owe UBIT.  If your IRA or 401(k) owns an active business structured as a pass through entity (such as an LLC or partnership), you owe UBIT.  UBIT, or Unrelated Business Income Tax, applies to tax exempt organizations including retirement plans. To pay UBIT, Form 990-T must be filed with the IRS.

 

Gold is a very popular investment these days. Is it possibble to own collectibles such as art, coins, and  physical gold inside an IRA? No. When an IRA purchases a collectible, the amount used to make the purchase is treated as distribution to the owner. It is included in the owner's gross income, and if the owner is under age 59½ and does not qualify for one of the exceptions, a 10% early distribution penalty is imposed on top of the income taxes.

Retail Investors Whipsawed by Changing Rules of the Game

We all have seen the real estate bubble unfold because banks, brokers, buyers, regulators, and Wall Street all looked a blind eye. Less conspicuous, but just as damaging, was the greatest financial crime in history. Today I will attempt to document how governments, regulators, brokerage firms, and foreign banks are crushing the retail investor.

• Deutsche Bank is liquidating the PowerShares DB Crude Oil Double Long ETN (DXO). Deutsche Bank said: “Limitations imposed by the exchange on which Deutsche Bank manages the exposure of the Notes have resulted in a “regulatory event” as defined in the terms of the Notes, which has caused Deutsche Bank to redeem the Notes.”
• In an effort to stem the effect that the seemingly inevitable regulation will have on futures-based commodity funds, multiple ETF issuers have halted share creation. Thus, these securities trade at huge premiums to the underlying commodity (market distortions).
• FINRA announced that it would be increasing margin requirements for leveraged ETFs as of Dec. 1. These changes will require margin for leveraged funds to be  "commensurate" with the degree to which they are leveraged. FINRA's warning set off a domino effect as firms like Edward Jones, Ameriprise, and UBS ceased selling leveraged funds to investors.
• Switzerland’s oldest bank, is telling wealthy clients to sell their U.S. assets, or switch banks, because of concerns new rules will saddle investors with tax obligations in the USA. U.S. proposals to extend reporting requirements for banks whose clients buy American stocks and bonds coupled with estate tax liabilities have put Switzerland’s traditional bank secrecy at risk.
• Canada's Royalty Trusts are similar to U.S. master limited partnerships in that they generally pay out a substantial portion of their cash flow in the form of monthly distributions. The Canadian government wants a piece of that. In 2001, in what has come to be known as the "Halloween Surprise" for its announcement on October 31st, 2006, these trusts will have to change their structure and their payouts or face huge tax consequences.

Option Selling Netted Me $377.69 in January

In February, I might get 100 shares of VXX and 100 shares of TMV put to me at a lower price than today. Since I buy low, sell high, I have no problem with that.

If TMV heads to $82, then 100 shares get called away in February. Nice!

Crisis-Proof Your Portfolio