I have $118k in a 401k that is solely SPY… could I sell calls at a strike price such that it would cover my 10% penalty and I really wouldn’t lose anything besides cashing out the 401k? They would call my shares away at say a 12% upside? Poke holes in this please
Selling calls against my 401k
byu/Professional-Let-428 inoptions
Posted by Professional-Let-428
3 Comments
Are you planning on cashing it out? You’re gonna be taxed on the profits from the sale of the calls anyway.
Leave it and it goes up 10%: 129k
Take it out and capture 10%: 99k
If you take a distribution they’ll withhold income tax before giving it to you. If they withhold the penalty its even worse.
You’re asking two questions, no? 1 about selling covered calls; and another about withdrawing from a 401(k). The two subjects don’t have to be combined – I’ve been selling puts and calls in an IRA and 401(k) for a decade and have not withdrawn a dime. Or are you just asking how to make more $ since you have to withdraw early?