20yrs old with a roth ira I plan to max out every year looking fo risky growth since I'm young so I plan to only invest in schg till 40 and rebalance for risk profile. I want to add a little more gain by selling otm covered calls for a little bit of premium nothing crazy to reinvest. I was planning to do it to schg but they don't have as much much option volume as spyg so I'm thinking of switching, is there anything wrong with my plan or a better way to do it?
Posted by theo258
4 Comments
Do everything you mention, but don’t do the covered call part.
Great that you are investing in your future. Spyg sounds good. But don’t do covered calls. Set a strategy for DCA and if you want to add a bit more risk allocate some into a high potential stock but not more that 5-10% of your regular investment. Do your research.
I like the idea of selling calls. Be familiar with rolling and sell on up days. Don’t get greedy.
I have some experience with SPYG. There’s not a lot of liquidity to roll when it gets in the money or jumps quickly in my experience. Plus there are only monthlies available. I usually wait until the week of, maybe Wednesday before expiration, and try to eke out a few bucks. It has too much potential to move over the course of a month to only be able to buy 2-3 dollars over the current price at the beginning of the expiration cycle.