I thought the 15% rate was gone. I guess not
If we filed married filing separately and give my husband all his earnings and all dividends, and then have me take only my paltry earned income and Capitol gains would they be 0%, if I can get my income low enough? Could I also take the child tax credits that have been phased out for us and itemize all our health costs (we don't make it to 10%, but pretty close), or is that not allowed? Could I open an IRA with after tax money?
I'd have to run several variations to see if it makes sense, his tax rate would be higher but the child tax credit alone would off set $1,000. I'm pretty sure there are other credits we are phased out of. If I can open an IRA at a lower tax rate it would be pretty valuable since the majority of our IRA funds are going to be taxable in retirement, the way things currently stand.
Back to the original question about options, because my spouse likes a heavily tech weighted portfolio, how much, roughly, would it cost to protect 100 shares for $100? Is the cost pretty linear, if we want to do 10x that? We can build the cost of the option into the cost basis, right?
So many questions
We have always been aggressive savers, but we have a very incomplete understanding of how to best handle the nest egg.
That is the question. But only because I'm way over weighted in this single stock. It just hit a 52 week high.To sell or to hold AAPL (currently)?
Is there a way to use options to protect an out of balance portfolio during a high income year (so we don't want to sell shares until 2015 at the earliest)?
I've read up on short term options but I'm not finding much on how things work for a much longer term.
Hmm.. can you break that down a little further? I think many people might get tripped up by what you suggest.You can sell January 2015 at the money call and buy January 2015 at the money put. In this way, you are synthetically sold your shares.
Hmm.. can you break that down a little further? I think many people might get tripped up by what you suggest.
Excellent. I like it. I personally went with a bear put spread because your trade will require a transaction, unless it's at exactly $650- great to defer capital gain. Mine cost a little more but didn't cap the upside, because the basis is already into LTCG and therefore I wasn't focused on the lock in.Assume there is 100 shares of aapl in the portfolio. At today's closing, AAPL share price is $644.82. Jan 17 2015 $650 strike call option price is $43.50 and Jan 17 2015 $650 put option price is $52.7. bid ask spread is ignored for simplification.
Instead of selling 100 shares of aapl directly today which can incur income tax in 2014, op can elect to buy a Jan 17 2015 $650 strike put option @$52.7 and sell a Jan 17 2015 $650 strike call option @$43.50. op has to pay for this trade (52.7-43.50) x100=$920.
After the trade, the portfolio is as following:
100 shares of aapl
+1 Jan 17 2015 $650 put
-1 Jan 17 2015 $650 call
By the option expiration day, if aapl price is > $650, your shares will be called away at price $650/share since you shorted a call; if aapl price is <$650, you can exercise Jan 17 2015 $650 put option and sell the price at @$650/share.
either way, the share was sold at $650/share.
Sure, I'll write up a post when I get a moment.Matt could you talk about hedging/protecting your portfolio with puts in a general sense and specifically if your investing in index funds?