Samwise Model Portfolios
The portfolios below are separated by launch dates. Each portfolio is entirely independent and has no bearing on any other model portfolio. We launch entirely new portfolios during each market correction as an illustrative tool for new subscribers who weren't present during...
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Ho well, a disapointing day.
Hey Sam,
Does it matter if i use a margin account instead of Roth IRA for the 5k to 1,000,000 challenge
I’m Canadian, and in Canada you can’t do vertical spreads in a TFSA (Canadian equivalent of Roth IRA)
The reason I can’t is that i’m not allowed to sell short calls in a TFSA. I can only sell covered calls/puts or buy calls/puts. I would need to get a margin account to do vertical spreads, which would be subject to the capital gains tax. In Canada, 50% of capital gains are taxable.
Would it be wise for me to follow your trades in a margin or should I do something differently?
That’s a question that I’d direct to your broker and accountant. That’s less of a market related question and more of a brokerage account/tax related question.
I know that as our strategy is concerned, for the $5k-$1M challenge, we’ll mostly trade vertical call-spreads given the amount of inherent leveraged provided with the strategy. Any other strategy would require a much longer duration of time and/or several more trades which in turn increases the likelihood of failure.
For us, the safest, smartest and easiest way to accomplish the challenge is by going long a vertical call-spread and then hedging it with puts. We’ll be doing something like 75-80% long call-spreads and 20% long put options to hedge.
Given your personal situation, I’d first ask an accountant what makes the most sense and then see if your broker can accommodate what your accountant recommends. That’s how I’d approach it.
Ok thank you
I am in the same situation. I have prepared a margin account in my Questrade and activated the level of options trading that allows trading vertical spreads. I will be hit with a hefty tax (50% ?) on every trade so I’ve populated the account with twice the starting amount (10 k US). In other words, I will be doing my part for the country :/
Edit : 50% of the capital gains is added to your total annual revenue and taxed at your marginal tax level. It ends up to approximately 24-27% of the gains.