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Re: index fund that never goes down ?
Old 03-01-2007, 08:49 PM   #21
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Re: index fund that never goes down ?

Quote:
Originally Posted by RustyShackleford
When I check options for SPY, for example Sept '07 expire,
I see two listed at each strike price, for example at 141.0 I see
SFBIK.X and RQQIK.X. Their prices are fairly different and it's
tough to tell the difference. One European style and the other
not ? Thanks !
I was referring to options on the actual index. For prices, check out

http://finance.yahoo.com/q/op?s=%5EGSPC

The ones to which you are referring are on SPY (the ETF). They are American style and have physical delivery (they exercise into shares of the ETF).

http://www.cboe.com/micro/SPDR/spec.aspx

Options on the ETF are 1/10 the size of those on the index.

The two you cite are really the same - note that the last trade in RQQIK was on Jan 18 - that is why the prices differ.
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Re: index fund that never goes down ?
Old 03-01-2007, 09:10 PM   #22
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Re: index fund that never goes down ?

Quote:
Originally Posted by FIRE'd@51

The two you cite are really the same - note that the last trade in RQQIK was on Jan 18 - that is why the prices differ.
I see that the RQQIK last trade was Jan 18 - and the SFBIK is current - but why two symbols for the same expiration/strike?

I think I've seen this when the stock splits, they might issue new options to track the new price, but the SPY ETF has had no splits.

?

-ERD50

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Re: index fund that never goes down ?
Old 03-01-2007, 09:10 PM   #23
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Re: index fund that never goes down ?

These things are called structured products. There are many, mostly floated by Citicorp and other big banks. I have a very small position in one called CAQ. In its case the dynamic part is a basket of currencies. At today's quotes, the minimum guaranteed return is about 3% over 15 months.. If the currencies stay where they are today, the return would be a little over 4.5%. Basically it a free or close to free speculation on the weakness of the USD against a group of mostly Asian currencies.

There are many other products tied to S&P 500 and other indexes. It would take some work to figure out what you are being offered at what price, but I am sure some are OK to good specs. They might appeal to an investor who isn't sure that high returns to passive investing are necessarily in the offing. They would likely not appeal to one who believes stocks are always the best investment.


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Re: index fund that never goes down ?
Old 03-02-2007, 06:41 AM   #24
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Re: index fund that never goes down ?

Quote:
Originally Posted by ERD50
I see that the RQQIK last trade was Jan 18 - and the SFBIK is current - but why two symbols for the same expiration/strike?

I think I've seen this when the stock splits, they might issue new options to track the new price, but the SPY ETF has had no splits.

?

-ERD50
The RQQ expire at the end of quarters (Mar, Jun, Sep, Dec).

http://finance.yahoo.com/q?s=RQQIK.X

The others expire at the normal times (Sat after 3rd Fri)

http://finance.yahoo.com/q?s=SFBIK.X

Some more info:

http://www.cboe.com/Products/indexop..._all_spec.aspx
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Re: index fund that never goes down ?
Old 03-02-2007, 08:01 AM   #25
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Re: index fund that never goes down ?

Quote:
Originally Posted by FIRE'd@51
The RQQ expire at the end of quarters (Mar, Jun, Sep, Dec).

http://finance.yahoo.com/q?s=RQQIK.X

The others expire at the normal times (Sat after 3rd Fri)

http://finance.yahoo.com/q?s=SFBIK.X

Some more info:

http://www.cboe.com/Products/indexop..._all_spec.aspx
Thanks - I was not aware of these quarterly products.

Here is the detail I missed on the yahoo quote page:

SPY Sep 2007 141.0000 call (RQQIK.X) Expire Date: 27-Sep-07

SPY Sep 2007 141.0000 call (SFBIK.X) Expire Date: 21-Sep-07

-ERD50
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Re: index fund that never goes down ?
Old 03-02-2007, 08:16 AM   #26
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Re: index fund that never goes down ?

Just for the record if anyone looks at this thread later....

Justin did a quick calculation that these funds (the original thread) should return about 9%. That might be true mathmatically, however, in actuality these equity annuities have huge front-end commissions and large fees that make them one of the worst investments on the planet.

You just can't get the expected return from an insurance company. What you get is insurance.
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Re: index fund that never goes down ?
Old 03-02-2007, 08:42 AM   #27
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Re: index fund that never goes down ?

Quote:
Originally Posted by Mysto
Justin did a quick calculation that these funds (the original thread) should return about 9%. That might be true mathmatically, however, in actuality these equity annuities have huge front-end commissions and large fees that make them one of the worst investments on the planet.

You just can't get the expected return from an insurance company. What you get is insurance.
For the record the returns I calculated (roughly) for the risk-hedged product I mentioned were ~6.6% average annual return over the 1997-2006 10 year period.

I called the credit union offering this deal. Obviously I didn't read the fine print! The risk-hedged product is offered as a segue into a full brokerage account (w/ Vanguard funds) and the min. acct balance is $3000. The risk-hedged product is called a "Bridge" account and has a maximum balance of $3000 (after that you have to go to the brokerage acct). That's the catch - you can't have any serious money invested in the risk-hedged account. They also charge $1.50 per month, which equates to 0.6%/yr on a $3000 balance. No other fees/early withdrawal penalties apply.

So, the 10 year avg annual return is more like 6% per annum. I'd stick with CD's or a bond.

The "point" of the Bridge acct offered by the CU is to make account holders aware of the risks of investing (you may not make anything!) while the stakes are small.
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