Thursday, May 11, 2017

How to make USD dollars?

Once upon a time, Canadian dollar was at par with American dollar.  Those were the good old days!  Fast forward to today:

Canadian Dollar equals
0.73 US Dollar
Chart of exchange rate values over time


I save my hard earned income from my 9-5 job to invest in stocks.  In order for me to trade American stocks, I need to convert my Canadian dollars to US dollar.  I have done so in the past where it was on par and I've made money on the exchange if I were to switch back to Canadian dollars now.  The exchange sucks these days.  I do not want to lose out on foreign exchange fee, it's like buying American stocks for a premium. 

How to make USD dollars?  

I sell USD option premiums using my margin account.  When I sell a naked CALL or naked PUT option, I receive $USD in my cash balance on the day of my trade.  

Short Naked  CALL/PUT


Margin
Initial100%* option market value + maximum (((30%* (underlying market value) - out of the money amount), 10%* strike price, $250* number of contracts). Short sale proceeds are applied to cash. 30% above is 15% for broad based index options.
MaintenanceSame as Initial.
Of course, there are many different options strategies to lower your margin use through credit spreads.  I am usually an option seller to collect premiums from the securities I write.


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