How I Made More Money Than the Tax on SPYG Dividends by Selling Calls
Generating Passive Income Beyond Dividends 💰
Many investors focus solely on dividends for passive income, but I took a smarter approach—selling out-of-the-money (OTM) call options on SPYG. By doing this, I collected premiums that added to my cash flow, often exceeding what I would have received from dividends alone. Since most of my sold calls expired worthless, I kept 100% of the premium as pure profit.
Why Selling Covered Calls is a Winning Strategy 📈
SPYG is a growth ETF that doesn’t offer high dividend yields, meaning relying on dividends alone would provide limited income. Instead of waiting for quarterly payouts, I sold OTM call options at strikes above the current price, capitalizing on time decay (theta) and a high probability of expiring worthless.
From the image:
• The 20250117 $92 call lost -$31.76, possibly due to recent price movements.
• The 20250117 $91 call is profitable at $44.50.
• The 20241220 $90 call returned $149.50, possibly from premiums collected and expiring OTM.
These option premiums directly offset any taxes on dividends, effectively letting me keep more of my earnings while still holding SPYG shares for long-term gains.
Final Thoughts: The Power of Options in Tax Optimization 🚀
By selling OTM covered calls, I not only made more than what the tax on SPYG dividends would have cost me, but I also reduced my effective tax burden since option premiums aren’t taxed like dividends in some jurisdictions. This strategy allows me to boost my returns, generate income, and maintain long-term exposure to SPYG—a win-win for any smart investor!
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