The first step to any endeavor is to educate yourself.
- The “4% withdrawal rate” has almost nothing to do with “generating more than 4%” from your investments. The two are only tangentially related.
- The “4% withdrawal rate” rule of thumb applies to a 60/40 portfolio (or a XX/YY portfolio as long as the YY% can cover at least 5 years of living expenses), it doesn’t apply to a covered call/selling puts portfolio.
- One of the problems I have found with covered calls or selling puts is that it isn’t easy to keep the money deployed at all times. That means that there will be times in which it isn’t deployed and only earning roughly at the current short-term treasury bill rate.
@captainccs does this regularly for a big chunk of his retirement income. Read his myriad posts about covered calls. If anyone here is an expert on covered call selection, it is indeed him.
Every year or so, after the next set of LEAPs begin trading, I sell a bunch of put options on strong companies. Most years they eventually expire worthless, but every 4 or 5 years they don’t. I mentioned this in a post yesterday or the day before. In September, when the Jan 2026 LEAPS began trading, I sold a few put options, among them, the Apple Jan '26 125 option. To me, that’s a rather conservative trade as I outlined in that post.