Mr.Saver's Long-term Leveraged Investment Strategy Using LEAPS

masonic

Username999 said:

fear_of_fear said:

You'll need an IV drip by the time this is over.

Can you explain that?

A joke perhaps?

coyrls

It would probably be cheaper to use Transferwise to convert £ to US $ and then transfer the US $ to your US broker account, where it will appear to be a local US account to US account transfer.

coyrls

You can transfer out via the same route.  It's generally quite hard and expensive to get US $ out of the US to a non US based account.

Mr.Saver

coyrls said:

It would probably be cheaper to use Transferwise to convert £ to US $ and then transfer the US $ to your US broker account, where it will appear to be a local US account to US account transfer.

But the bank account isn't going to be in my name, so the broker won't accept the money from their US bank account.
Honestly if it wasn't because of the EU's regulations, I'd have used Interactive Brokers. It's a lot cheaper to do FX exchange with IBKR, and domestic bank transfer is free. But the EU's regulations would continue to apply even after Brexit, so IBKR isn't an option.

coyrls

Mr.Saver said:

coyrls said:

It would probably be cheaper to use Transferwise to convert £ to US $ and then transfer the US $ to your US broker account, where it will appear to be a local US account to US account transfer.

But the bank account isn't going to be in my name, so the broker won't accept the money from their US bank account.
Honestly if it wasn't because of the EU's regulations, I'd have used Interactive Brokers. It's a lot cheaper to do FX exchange with IBKR, and domestic bank transfer is free. But the EU's regulations would continue to apply even after Brexit, so IBKR isn't an option.

It will be in your name.

Mr.Saver

coyrls said:

Mr.Saver said:

coyrls said:

It would probably be cheaper to use Transferwise to convert £ to US $ and then transfer the US $ to your US broker account, where it will appear to be a local US account to US account transfer.

But the bank account isn't going to be in my name, so the broker won't accept the money from their US bank account.
Honestly if it wasn't because of the EU's regulations, I'd have used Interactive Brokers. It's a lot cheaper to do FX exchange with IBKR, and domestic bank transfer is free. But the EU's regulations would continue to apply even after Brexit, so IBKR isn't an option.

It will be in your name.

Thank you for this info. It might save me $30 next time.

Mr.Saver

bowlhead99 said:

Mr.Saver said:

The first transaction took place on 13 Feb, I bought 1 contract of SPY 2022 JAN 170 CALL for $16,900.14. I've also bought 6 shares of SPY for $2,026.15.

All numbers are in USD and including fees and commissions.

A downside of investing outside a tax wrapper in a US-listed ETF that hasn't succesfully applied for status as a Reporting Fund within HMRC's offshore funds regime  (https://www.gov.uk/government/publications/offshore-funds-list-of-reporting-funds) is that when you make a gain on the fund it is presumed to be taxable under income tax rather than capital gains tax. The regime exists to stop people stashing their money in foreign funds which don't provide information about undistributed income, rolling up income inside them without reporting it, and then cashing out at a higher price.

After a bit of research, I've found a nice solution to this problem. I've found that the Vanguard S&P 500 ETF, which has CUSIP number 922908363, is in the approved offshore reporting funds, and it's also trading on NYSE with ticker symbol VOO.

Mr.Saver

The market down turn comes earlier than I anticipated. Since S&P 500 has gone down 10% and reached my rebalancing price point, I've sold the 170 call and bought 155 call on Thursday.

Username999

That was a quick adjustment!
Was it part of the plan?
GL

Mr.Saver

Username999 said:

That was a quick adjustment!
Was it part of the plan?
GL

Yes, indeed. Market downturn is expected, but honestly it comes a lot earlier than I expected. The response for that is also in the plan. The plan is to keep the leverage close to 2:1, and a market downturn will cause the ratio to go up (in this case, it went up to 2.28:1), the response would be rebalancing it back to the 2:1 ratio. My next rebalancing point is SPY 281.8 or 344.5, whichever comes first.

Though, I have to admit, practically I will have problem to rebalance it if SPY reaches 281.8 too fast, because I don't have enough cash left in the broker account, and the international bank transfer is slow and costly. If it happens, I might have to delay the rebalancing and hope the market doesn't move too far while I'm selling other investments and transferring the fund.