Wednesday, August 29, 2018

Should I have sold Fidelity Contrafund to "sell puts, then calls?"

On 8/17/17, upon retiring from Fidelity Investments, I sold $376K of my Fidelity Contrafund (which I had built over 10+ years) & directly rolled over that amount from my 401K into my IRA.  With this $376K, I sold puts against 4 ETFs, & if I was forced to buy an ETF, I sold calls against it.  Every month, consistently.  My target allocation was 40% SPY (S&P 500), 15% EFA (developed-int'l), 10% EEM (emerging-int'l) & 35% TLT (US Treasurys).  I added $14K to this $376K over the next year, & on 8/20/18, my option selling strategy was valued at $402K.  The $12K increase amounted to a 3.03% return.  On 8/20/18, my allocation was skewed to 28% SPY, 18% EFA, 18% EEM & 36% TLT.  Had I kept my $376K in Fidelity Contrafund on 8/17/17, on 8/20/18 it would have been worth $467K, returning 24.2%.  Did I make a mistake?  I'd love to hear my readers' comments. 

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