beginners corner
Archive | Stock Trading & Taxes RSS feed for this section
actively-managed mutual funds versus Index Funds

Indexing: A Key Component to Successful Long-Term Investing

In my book, Stock Investing for Students, I develop a long-term investment plan to achieve financial independence and an early retirement. The plan is initiated by using broad market index funds. This article will highlight the reasons why I favor passively-managed mutual funds to their actively-managed counterparts. First, some definitions.   Definitions Index fund: A type […]

23 Comments Continue Reading →
timing of option-selling trades

What is the Best Time to Execute Our Trades?

Covered call writing and selling cash-secured puts involve buying and selling stocks and options. We work meticulously to do everything possible to throw the odds in our favor to result in successful trades. Achieving the highest level of returns in a low risk manner is one of our mission statements. I have frequently highlighted the three required […]

41 Comments Continue Reading →
actively managed and passively managed mutual funds

Evaluating the Performance of our Mutual Funds and Financial Advisors

Utilizing a portfolio of mutual fund investments is a topic I have addressed in my book, Stock Investing for Students. Investing with these securities represents a longer-term investment plan than covered call writing and selling cash-secured puts. A significant number of retail investors use financial advisors to select various mutual funds for their portfolios in hopes of generating the […]

21 Comments Continue Reading →
contract adjustments following reverse stock splits

Reverse Splits and Unreliable Options Chains

Stock splits are corporate events where the number of shares in circulation changes as well as the price -per-share. If we own 100 shares at $50.00 per share pre-split and the stock splits 2-for-1, then we will own 200 shares at $25.00 post-split. The value of our position ($5000.00) does not change.   What is […]

17 Comments Continue Reading →
fundamental analysis for option-selling

GAAP versus Non-GAAP Earnings: Challenges of Fundamental Analysis

Fundamental analysis is the first step when screening stocks for covered call writing and put-selling. Years ago I actually read the financial statements of companies I was interested in.  I eventually came to the conclusion that this was an exercise in futility as it was time-consuming and, in many cases, difficult to confirm the accuracy of […]

26 Comments Continue Reading →

What Are Wash Sales And Wash Trading? Are They The Same?

Covered call writing and put-selling involve the buying and selling of stocks and options. When executed in non-sheltered accounts, taxable events are created. Since the BCI community is populated with savvy investors, the topic of wash sales has come up frequently and some have used the term wash trading interchangeably with wash sales. This article will discuss […]

18 Comments Continue Reading →
Alan Ellman/covered call writing seminar

Capital Gains (Losses) For Selling Cash-Secured Puts In Non-Sheltered Accounts

In a recent article, tax implications for covered call writing was discussed. In this publication I will highlight the tax ramifications as they apply to selling put options. What is a Capital Gain?  A capital gain is an increase in the value of as capital asset, such as a stock or an option that gives […]

17 Comments Continue Reading →
covered call writing and capital gains

Capital Gains (Losses) For Covered Call Writing In Non-Sheltered Accounts

Whether we sell covered calls or cash-secured puts strong consideration should be given to trading in sheltered accounts whenever possible. Most, if not all, of our trades will be short-term in nature (less than one year) and therefore will be taxed at the ordinary income tax rate (up to 35%) which is much higher than […]

28 Comments Continue Reading →
Stock investing-retirement plan

Stock Investing For Students: The Book I’ve Always Wanted To Write

Self-investing starting at a young age can ensure a successful financial future and an early and comfortable retirement. So why is nobody doing this? The answer is complicated and includes such factors and the social pressures facing our youth, certain pre-conceived ideas regarding our ability to successfully self-invest and the education or lack thereof needed […]

10 Comments Continue Reading →
Know the risks of trading after hours

After Hours (AHT)and Pre-Market Trading: Is It Right for Average Retail Investors?

It’s 4 PM EST and the bell rings on the New York Stock Exchange marking the end of the trading day. As we watch CNBC, Bloomberg or Fox Business News we see the tickers till scrolling at the bottom of our TV screens! What’s up with that? The New York Stock Exchange and the Nasdaq […]

5 Comments Continue Reading →