This one guy I went on a date with said he owned a business. I pried further with questions and he said it was stock options on a large scale.
He showed me his portfolio and it dipped in 2020 from 600 to 300k. I said, “did you really lose $300k in a single day?” And he said yes, but he learned from that and made sure it wouldn’t happen again.
Upon closer inspection, he has been using a traditional IRA to do the stock options. wtf? I asked, “uhh, so this is cold hard cash you’re making monthly?” And he said yep!
I was like “that says IRA. Isn’t there a penalty to take it out?”
He was like “well, yeah but I never take it out and the penalty is less than what it gains.”
Dude lied every single answer, I swear. Has anyone else come across someone who does that with retirement accounts? Is that as insane as I’m finding it?
I went on a date once with a guy that used his IRA to buy stock options, is that normal?
byu/Youredone_youredone ininvesting
Posted by Youredone_youredone
6 Comments
I’ve seen people post about that. In theory, the tax-free gains make the Roth IRA a no brainer to trade options on.
Of course, that is in theory. Because in theory you can make a million trading options. In theory you can make ten million! But reality… is often not that
All doable. Hard to do well though.
I’ve realized approx. $200k in gains over the past 2 years flipping LEAPS in my IRA, almost doubling it’s value (now $500k).
Most of that is now in VT and will hopefully grow nicely until I’m 59.5 years of age.
It’s a thing you can do. I don’t think it’s common. I’ve traded options for several years but only rarely in my IRA. When I do make an options trade in my IRA, I make sure that my position size puts only a small amount of my balance at risk.
I do covered calls from my Roth IRA. I’m not making much on the transactions, but some gain is better than no gain. All tax free.
This whole thing sounds like a fake interaction made from someone who doesn’t know anything about investing. Like watching actors pretend to be hackers.