smsf investment options.., page-5

Lindso47

I had advice from my accountant prior to setting up the fund & he drew up the trust deed and the trading strategy, I had advised him that I would be trading options and my own tax returns outside of super show me as an option trader.

As the writer of call options you are in control during the life of a European option: I can only be exercised at expiry, so the ownership of the share remains in my name [ or the SMSF fund ] and hence the dividend, no early exercising & dividend stripping which has occurred in the past with American options. I can buy a corresponding European option in the same series at the then current price, obligation gone, then write it to a price, date & type of my choosing, so I am in control except in the direction of the share price.

I write mostly American options, the premium is always larger, but with telstra this strategy was a dividend play so I needed to protect the dividend & franking credits. You can write American options and use an expiry date several months past the dividend date to force the option buyer to pay for this time if they want to exercise & collect the divvy, this has happened.
A profit is a profit and its nice to get paid for time not utilised.

Option writing is not the best strategy in all markets but you can back yourself bothways by choosing higher strike prices, I like strike prices close to the share purchase price on new purchases for 1 to 2 month terms, this gives fat premiums, some downside protection and a change of a small capital gain.

In a rising market [ what ever that is ] I will still write the option, but buy it back & roll it up if the share price passes the strike price near expiry date.
This gives you a mixture credits & debits but overall the strategy has worked for me. When the price falls I continue to write options where possible at strike prices 6% more than the current share price after an up day or two. Then only for the current month, this way you can manage it and keep it out of harms way [ except for take over offers etc.]

Anyway enough of this, there is no advice offered or inferred just what I have been doing during these uncertain times, read and research, and use professional help.
Thanks for the reply .... happy trading
Cheers Mattocks