written by reader Re: Jeff clark of Stansberry research

By mike11336, May 30, 2012

Can anyone comment on this latest tease about how to ’unlock your account for instant cash’? Apparently you need to talk your broker into giving you a ’special form’ which along with Clarks instructions allows you to ’unlock’ a hidden feature on your account page enabling you to access a share of the brokers fees. Sounds fishy, but great if true.

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Bob S.
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Bob S.
May 30, 2012 3:39 pm

It’s all about naked options. My IRA (Fidelity) doesn’t allow them. Be very careful with naked options.

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denny
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denny
June 1, 2012 4:08 pm
Reply to  Bob S.

Selling naked puts on high quality, cash-rich, dividend paying stocks such as MSFT, INTC, KO, etc., at a strike price at which you would buy the stock anyway is a very conservative strategy, more conservative than buying stocks outright. It is safe enough that it is allowed in an IRA. Sellng naked calls is extremely risky. If I even think about selling a naked call I immediately call my psychiatrist.

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CaveBear
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CaveBear
May 30, 2012 5:26 pm

The form is the options trading form, and the strategy is either covered call writing, or put selling (cash covered, probably, unless you have a margin account).
I have rarely made money with covered call writing, although have used it to balance losses sometimes.
I have made plenty of money with put selling, however, and it’s a great way to buy stocks you want, at a lower price than their trading for, and make some money while it waits to get down there.

Watch out for taxes.

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Brian
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Brian
June 1, 2012 8:13 am
Reply to  CaveBear

Can you expand on the “taxes” comment? I see many investment advice services touting puts, but none cover the tax implications. How are they reported?

hlredd01
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hlredd01
June 1, 2012 10:45 am
Reply to  Brian

I would love to hear more on this also.

Ric Mauricio
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Ric Mauricio
June 1, 2012 11:01 am
Reply to  hlredd01

As an enrolled agent, I have done many tax returns that have my clients doing options strategies such as put and call writing.
Basically, I treat it the same as any capital transaction, whereas, you sell a put at let’s say, $10 and it expires at 0. You have a $10 gain, and since it is usually held less than a year, it is a short term gain taxed as ordinary rates.
If you get exercised, you would still have the same gain, but you would also have a new cost of the new position or in the case of a covered call, a sale of the stock causi