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Re: Writing covered calls
Old 11-25-2006, 12:46 PM   #21
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Re: Writing covered calls

I never bought stocks just to sells calls against, but I did sell covered calls on stocks I was looking to sell anyway. As soon as I bought a stock, I would pick a selling price. When the stock got to my selling price, I would sell a call against it at a higher price one or two months out.

The one stock I did a lot of covered call selling in the 90s was Staples. I made more money selling covered calls than I did on the eventual sale of the stock.

In fact, I got rid of most of my stocks with covered calls as I moved away from stocks and reinvested into mutual funds.

I could never figure out why I never got a 1099 for the covered call sales.
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Re: Writing covered calls
Old 11-25-2006, 03:09 PM   #22
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Re: Writing covered calls

Quote:
Originally Posted by retire@40
I could never figure out why I never got a 1099 for the covered call sales.
Sorry to break the news, but you still owe taxes on the gains.

Yep, you get a 1099 for stock sales but not option sales, or sale of your house, either. But you are still obligated to pay taxes on them, if they are owed. Trying to figure out why is an exercise in futility - these are taxes we are talking about.

The feds sure make paying your taxes correctly a pain.

Here's the fun reading part:

http://www.irs.gov/publications/p550/ch04.html#d0e12992

-ERD50
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Re: Writing covered calls
Old 11-25-2006, 04:30 PM   #23
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Re: Writing covered calls

Quote:
Originally Posted by ERD50
Sorry to break the news, but you still owe taxes on the gains.
I knew the news and I paid all my taxes on all option gains since the early 90's, just don't know why the investment companies don't send out 1099-B forms for option sales as they do for stock and mutual fund sales.
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Re: Writing covered calls
Old 11-25-2006, 10:21 PM   #24
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Re: Writing covered calls

Quote:
Originally Posted by retire@40
... just don't know why the investment companies don't send out 1099-B forms for option sales as they do for stock and mutual fund sales.
I agree it seems strange. Why one transaction and not another?

Maybe the better question is *why* stock sales are sent to the feds? Most other transactions are up to the individual to report.

My preference would be to not tax any of this at all, but lacking that, I wish they would at least be consistent. Why track stock sales, but not the buys? I think it just comes down to our tax system being a hodge-podge of various laws passed at different times with no overall strategy or guidance. JMO.

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Re: Writing covered calls
Old 11-27-2006, 02:52 AM   #25
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Re: Writing covered calls

Quote:
Originally Posted by ERD50
I'd guess this is due to some radio infomercials I've heard recently. They make it sound like you just take 5% per month and never, never lose.

If you follow closely, I think you discover that they never lose because - they NEVER count their 'losers'! They just say, oh yeah, that stock went down, but we don't include that in our returns because we 'haven't closed the position yet'! Hmmm, I bet your mutual fund would like to do that! They claim you just keep selling calls on it, and rolling them out, and you keep making 'income'.

Well, accounting like that, it wouldn't be tough to find people that have been following their strategy for 6 months and are reporting fantastic returns. A few stocks dropped? No problem, we are still selling calls on them - just look at all the money we made on our winners. I'm surprised they can say stuff like this on the air.

As other pointed out, high premiums mean high risk stocks. One loser wipes out many winners. I'm doing it now, I think it can work out, but it's not magic, and I sure have not made any 60% a year.
Like others mentioned here, I too have sold several hundred covered calls ( and a number of naked puts as well), and while not wanting to appear as a Troll, I think that the various infomercials are like the ads for cars - you can see an ad for a Kia, or a Lexus. The devil is in the details.
I have followed, sort of, the SIM method, and while the 12 % mentioned is debatable for the S&P, that has been my experience for the so called losers, the ones that go down, you keep selling against the lower prices, and eventually when they go back up (and with a modicum of filtering), they usually all go back up, then you sell them, or not, at the strike price above your average overall cost, and add up all the option premiums and the gain on the stock and calculate your results. I have had the worst ones end up being in the 10-12 % range. The majority are well above 20 - 25 %. Overall has been a bit above 20%. And that includes adding in the uninvested funds as well - in other words, the total stake available.
I have a great skepticism about the infomercials promising 5% per month, as another writer previously stated. As to the commissions, I typically use a discount broker, to keep commissions low, and the total for the year, doesn't appear to be significant in the overall gains made.
JMO and experience.
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Re: Writing covered calls
Old 11-27-2006, 07:08 AM   #26
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Re: Writing covered calls

I write the occasional covered call, mostly on stocks I already own and am edging towards selling. I wouldn't be eager to buy something just to write calls on it, though.

Perhaps an example would prove worthwhile. Two weeks ago, I wrote December 40 calls on PLMD for $1.20 a pop. The stock was at 39.50 when I wrote the calls. I bought the stock a few years ago at roughly $8 a share when they got in trouble with Medicare and the stock crashed. I think they have a solid business long term and good growth potential, but I don't think much will happen between now and the end of the year, and the call premium was pretty fat. If it gets called away, I will look to buy back some stock on the next dip (volatile company), maybe around 36. If it doesn't get called away, I will pocket the $1.20 a share and hang around, since I believe in the business long term.

I also trade long calls for speculative purposes because I can make a bet in size while risking a small amount of principal. And I buy index puts from time to time as a hedge. But every dollar you spend on options should be money you fully expect to lose.
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Re: Writing covered calls
Old 11-27-2006, 09:28 AM   #27
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Re: Writing covered calls

Quote:
Originally Posted by whitestick
... the ones that go down, you keep selling against the lower prices, and eventually when they go back up (and with a modicum of filtering), they usually all go back up, then you sell them, or not, at the strike price above your average overall cost, and add up all the option premiums and the gain on the stock and calculate your results. ...
It's good this has been working for you, but I don't think it is reasonable to expect them all to 'eventually go up'. Keep buying stocks long enough and you will have some stinkers in the group. It is unavoidable. Esp with volatile stocks that pay the 5% one month premiums they talk about on that infomercial.

What is this 'filtering' you mention?

Your losers have gone up, and at a profit when you include the premiums - all well and good. My problem is with the people who are unwilling to count the down stocks until they close them out. At any point in time, they should be counted to see what your overall return is. If they continue to close at a profit, that will keep building your returns, but it is not right to just not count them until then. Example:

One month you buy 10, $100 stocks and write one month calls against them at $5 each.

At the close of the contract, say 9 stocks are still at $100. You pocket 9 x $5 = $45.

But, one stock drops to $50. You pocket $5, but on that date, you are down $50 on the stock. So, -$50 + $5 premium = -$45.

Your net return on the position on that date is ZERO. But, if you don't count the loser, your gain is $45 (or $50?). If next month, the stock comes back, and you close it at a profit, fine, do the same cumulative calculation and you will show a profit. That way, each month your calculations are based on the entire position, and can be compared. I think the proper accounting term would be to look at your 'liquidation value'. Anything else is really an attempt to predict a future profit, and that can't be done, and certainly does not compare to how mutual funds report. Their returns include the NAV of all holdings, not just the gains on the ones they sold.

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Re: Writing covered calls
Old 12-10-2006, 01:53 AM   #28
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Re: Writing covered calls

Sorry, I just realized that I didn't answer your question about the filtering. It is, unfortunately, the copywrited portion of the system that I paid the money for, and of course, they would not, as you expect, want me to put that out in the public domain. Before you jump me, the system is not the 5% one that a lot of the infomercials represent, and I have no affiliation with it other then have taken the class, do the homework (about 2 hours per month), and follow the system. It has no recurring revenue stream to the author, and she insists that you are the one most concerned about your money, so you should be knowledgeable in the decision making and manageing of your money (a philosophy that is prevelant on this board) If you are interested, her link is http://www.kimsnider.com no strings attached. Again just my experience, yours may vary - might be better.
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Re: Writing covered calls
Old 12-10-2006, 09:43 PM   #29
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Re: Writing covered calls

Quote:
Originally Posted by whitestick
Sorry, I just realized that I didn't answer your question about the filtering. It is, unfortunately, the copywrited portion of the system ...
OK, I'm not asking for specific details of the filtering algorithm, just what do you mean by the term - filtering? Filtering what?

Filtering your results - like not counting losers until they are sold?

Or filtering your stock picks - so you can pick stocks that 'usually all go back up'.

I'm really skeptical that any stock picking system could result in a selection of stocks that 'usually all go back up'. And, if it could be done, you would probably be better off just buying the stocks and taking ALL the upside, rather than capping your gains with a covered call. Have you compared your results with outright buys?

From http://www.kimsnider.com :

Quote:
The average annualized yield of the Snider Investment Method over our published track record (September 2002 - September 2005) has been 13%.
I am not impressed (should I be?). The S&P total return was 46.22% over those same 3 years. 13% over 3 years is less, 44.28% (1.13*1.13*1.13 or 1.13^3). And that term ' yield' concerns me - is that 'yield' or total return? A junk bond can 'yield' 13% while it's net value drops in half. Total Return is all that really matters.

and:
Quote:
Snider Method positions are very liquid. They can be sold at any time. If they are sold prior to the end of the process, which is the Snider Method equivalent to the maturity of a bond, the liquidation price will often be lower than the cost basis. The effect could be a realized loss on the stock, which could be greater than the accumulated yield from that position. Such a position would then be a net loss. We recommend that you allow at least two years for your positions to close. Some positions might take more than two years to close, but we expect the majority will close within two years.
So, if you have been doing this less than two years, you don't (by Kim's definition) have any losers yet. Again, I think there are a bunch of mutual funds that would like to present their results that way. The liquidation value of your account each month will tell you how that is going (properly adjusted for deposits and withdrawals, not the Beardstown Ladies method).

I certainly hope it goes well for you, but I'm smelling 'snake oil' here.

-ERD50

EDIT: I thought this had a 'deja-vu' ring to it. Take the wayback machine to Sept 2005:

http://early-retirement.org/forums/i...?topic=4088.60

Quote from: whitestick on September 14, 2005, 12:53:02 AM
Quote:
Her message as you point out is all about cash flow and yield.
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Re: Writing covered calls
Old 12-10-2006, 10:22 PM   #30
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Re: Writing covered calls

And here is the 'devil in the details', right from the horse's mouth:

bold is mine

Quote:
Originally Posted by [url]http://www.kimsnider.com/legal.php
[/url]

The yield calculation is different than the return calculation shown by most investment advisors. The yield includes option premiums, interest, dividends, and realized gains or losses from closed positions, but excludes unrealized gains or losses from open positions.
Of course, you don't have much 'unrealized gains from open positions' on a covered call - if you had a large gain, it got called away and is now 'closed'. So, they are essentially counting their winners, and not counting their losers. This is exactly what I got from the infomercials.

Hey, maybe this system is working for you, but I'd be nervous if I paid someone for advice that includes ignoring total returns in such a way as to make the system look good on paper. Just ignore that unrealized loss behind the curtain! Scary stuff.

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Re: Writing covered calls
Old 12-10-2006, 11:42 PM   #31
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Re: Writing covered calls

Quote:
Originally Posted by Delawaredave
OK, so Thanksgiving with my sister-in-law's famly - someone can't stop talking about the "can't lose" moneymaking strategy of writing covered calls.

Anybody play with this strategy ? (I'd guess folks on this board avoid these mechanics).

My little experience with options and arbitrage stuff is that the market prices these things pretty well - and that this is more "gambling" than "investing".

But I guess if there's a stock you're holding for dividend reasons or close to your sell target, this might be a way to add a little gain from it.

I suspect the food I got yesterday was better than the financial advice....
I have had several friends/relatives of friends bring up options when they heard I was
a stock investor. Both eventually got around to telling me about Wade Cook's foolproof
system of making 20% per month (neither had any real experience with stocks), which
they were just about to embark on. I tried to explain things to them. I think I might
have gotten to one of them.
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Re: Writing covered calls
Old 12-11-2006, 02:33 AM   #32
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Re: Writing covered calls

Ok, I'll try and answer as best I can. Please bear in mind, that I am not, nor do I claim to be, a FA, CPA, or other financial expert, therefore, to reply to your discussion about total returns vis-a-vis yield, I may get this wrong. Yes, if you look at overall liquidation value, you will likely see negative, with respect to following the system out and closing when the individual stock price is back above your total average cost. As she explains and you quoted, she recommends planning for a two year period for each individual stock position, to give it time, for worst case scenario, to return to a price that will allow closing without losing money. She gives an example of really worst case scenario, where it took (as I recall - it's a bit late now) about 3 1/2 years for 1 stock to recover, yet still met her goals for total time invested of the money involved. Also, her method is all about income and cash flow, so you realize the income independent of the actual stock price. Now I'll try and answer the other good points you brought up.

[quote=ERD50 ]
OK, I'm not asking for specific details of the filtering algorithm, just what do you mean by the term - filtering? Filtering what?

Or filtering your stock picks - so you can pick stocks that 'usually all go back up'.
This is the filtering, method she provides the parameters for - again bearing in mind that they are chosen for income, not capital appreciation.



Have you compared your results with outright buys?
Yes, and on any individual stock, you could do better, however, she is looking for minimal risk, and she constantly preaches that you can't time the market (a theme I've heard here on more then one occasion)
From http://www.kimsnider.com :

I am not impressed (should I be?). The S&P total return was 46.22% over those same 3 years. 13% over 3 years is less, 44.28% (1.13*1.13*1.13 or 1.13^3). And that term ' yield' concerns me - is that 'yield' or total return? A junk bond can 'yield' 13% while it's net value drops in half. Total Return is all that really matters.

This is part of the differentiation. Her yield is by stock, by year, and is for the total money you have selected to be available for that position (unlike the ones you mentioned above, where you actually have to commit money and purchase the funds/bonds/etc.), so it is a more conservative approach.
Also as you point out (I didn't bother to check your numbers), the S&P total return ... however, the return goes up and down, and much of the reason for stratification is to reduce the impact of the downturns. With the income method, it doesn't mattr, as the income still returns the percentage quoted on your money invested, not the value of the stock - more then that I'm afraid I'll get in trouble.


and:
So, if you have been doing this less than two years, you don't (by Kim's definition) have any losers yet. Again, I think there are a bunch of mutual funds that would like to present their results that way. The liquidation value of your account each month will tell you how that is going (properly adjusted for deposits and withdrawals, not the Beardstown Ladies method).

Not sure where you got that two years from, it's actually been over three, and if by losers you mean I have unclosed positions, the longest one I have right now is about 8 months, with vast majority less then 4 months before closing.

I certainly hope it goes well for you, but I'm smelling 'snake oil' here.

I was every bit as distrustful and disbelieving as you are, and kept looking for that oil as well, but to date, haven't found any. Also, there was a bunch of alums (think there were 30 couples) that got together back in April, and every single one of them reported similar results. Not saying there aren't a couple of all the grads that aren't complaining, but their complaints boil down to similar ones you have expressed. And they are fairly new, so are still fighting the concept.


EDIT: I thought this had a 'deja-vu' ring to it. Take the wayback machine to Sept 2005:
Guilty

Of course, you don't have much 'unrealized gains from open positions' on a covered call - if you had a large gain, it got called away and is now 'closed'. So, they are essentially counting their winners, and not counting their losers. This is exactly what I got from the infomercials.
No that is not the way it works. You don't get a "large gain" to get called away - it's slow and steady, and leave the gambling for big gains to the others

Hey, maybe this system is working for you, but I'd be nervous if I paid someone for advice that includes ignoring total returns in such a way as to make the system look good on paper. Just ignore that unrealized loss behind the curtain! Scary stuff.
Actually you only pay her the onetime fee for the training, after that she doesn't get any more - other then the occasional drink we buy her when we run into her somewhere
Re the unrealized loss, see the begining, it's only scary till you come to understand and practice it. Best recommendation I can make is that most of the alums all say that one of the reasons we got into it, was that if something happened to us, our spouses could step in and continue on with the same results and be taken care of financially. As it happened, one of the alums that was on our cruise died half way through, and his wife was able to make the trades the next trade day with no help from us, and realized the same results. That makes me sleep better.
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Re: Writing covered calls
Old 12-11-2006, 09:37 AM   #33
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Re: Writing covered calls

whitestick, thanks for your replies. I think a few points need clarification:

Quote:
Originally Posted by whitestick
Please bear in mind, that I am not, nor do I claim to be, a FA, CPA, or other financial expert, therefore, to reply to your discussion about total returns vis-a-vis yield, I may get this wrong.
It does not take a pro to understand the difference between 'total return' and 'yield'. It is simple, it is basic, and it is important and something that EVERY investor should know. I'm a bit surprised (not really), that over two days, a 298 page workbook, and $3,175 they do not cover this basic premise.

RE: S&P returns vs Kim's 'yield':
Quote:
Originally Posted by whitestick
This is part of the differentiation. Her yield is by stock, by year, and is for the total money you have selected to be available for that position (unlike the ones you mentioned above, where you actually have to commit money and purchase the funds/bonds/etc.), so it is a more conservative approach.
How's that? When you do a covered call - you have put money up at risk. You own the stock, it can drop, all the way to zero. Depending on the stocks and amount of diversification, it may or may not be more conservative than a fund or bond, but it probably isn't. You can't get decent option premiums on stocks that are not volatile - no one will pay them, that is a fact.


Quote:
Originally Posted by whitestick
Also as you point out (I didn't bother to check your numbers), the S&P total return ... however, the return goes up and down, and much of the reason for stratification is to reduce the impact of the downturns. With the income method, it doesn't mattr, as the income still returns the percentage quoted on your money invested, not the value of the stock - more then that I'm afraid I'll get in trouble.
And, the total return on stocks with covered calls goes up and down too - but Kim tells you to ignore that. But, we don't ignore it when we compare to the S&P? That is fishy.

Quote:
Originally Posted by whitestick
- more then that I'm afraid I'll get in trouble.
Interesting - I can understand Kim not wanting anyone to publish proprietary algorithms, but not wanting to discuss 'total return' is, ummm, suspicious?

RE: gains get closed versus losses roll forward:

Quote:
Originally Posted by whitestick
No that is not the way it works. You don't get a "large gain" to get called away - it's slow and steady, and leave the gambling for big gains to the others
Maybe my term 'large gain' was confusing. I meant if there was a large gain in the stock, it would be called away, and the position gets closed - so you realize the gain (no matter how big/small), but the losses don't get closed. It seems like a one-way street of accounting. Count your (small) gains, ignore your losses, big and small.


Quote:
Originally Posted by whitestick
if something happened to us, our spouses could step in and continue on with the same results
Except, we don't know what those results are - only what the gains are, not counting many of the loses. That is the problem, not the hours it may or may not take.

IMO, Kim is playing fast and loose with the numbers, not because this technique is 'different', but because it puts it her a good light. It is easy to look good when you devise an accounting method that ignores (or at least discounts) loses.

I sell covered calls as part of my portfolio. Each month, I look at my total return. I am not going to fool myself into believing I'm doing better than I am. If my *future* premiums offset any loses, that will show up as they are received. I am not going to discount those loses today against future (unknown) gains.

Just ask yourself - why does Kim use a different accounting method from 'most others'? And why is it buried in the 'legal' page, rather than up front where she talks about the plusses?

You really don't detect the 'snake oil'?

-ERD50
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Re: Writing covered calls
Old 12-11-2006, 10:20 AM   #34
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Re: Writing covered calls

whitestick, one more comment on that S&P total return, vs Kim's 'yield':

Apparently her 'yield' (which according to her, does not count some loses) did not keep up with the S&P total return. What makes this fascinating to me, is that this time frame is kind to her 'count the gains, not the loses' method. In a rising market, most of the options should get called out, and you claim the gains. So this should make the system look good.

Also interesting that her quote is based on SEPT 2002 to SEPT 2005.... pretty much a steadily rising market during that time frame. And an odd time frame at that, most institutions pick calendar year, or last X year(s) for their performance numbers.

I detect an awful lot of cherry picking. Cherry pick your gain method, then cherry pick the dates?

What if we were in a falling market? She would still claim to look good, not counting those pesky loses. I suspect your account balance would tell a different story.

I'm just suggesting - look at the whole picture. Don't get fooled by selective analysis.

Simple test - look at your start balance, look at your end balance. Do the simple math (assuming you had no more deposits/withdrawals) - (end-start)/(start). What % over what time frame? Compare to the S&P total returns for that period (the 'adjusted' numbers on yahoo historical quotes will include dividends). Then see how you are doing, and see how confident you are you could do it in a down market.

-ERD50

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Re: Writing covered calls
Old 12-11-2006, 10:53 AM   #35
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Re: Writing covered calls

Wow, I really don't mean to pile on, but the more I read on that web site, the more 'interesting' it becomes.

Even those doubly questionable 'yield' numbers are subject to one more serious accounting flaw. They are the product of 'survivorship bias'. The say the yields are calculated from the accounts under management (2.5% fee thank you).

Well, guess what happens when you measure returns on current accounts? Many of the people who were not happy with the returns have dropped out. So their poor returns are not included. I am willing to bet that if you included their returns, it would look worse.

It is good reading, it reminds me of the many variations in accounting methods, and why mutual funds are under such strict reporting rules (which, uncharacteristic for me, is something I think our federal government did a pretty good job on).


http://www.kimsnider.com/reports/Clo...ons_200609.pdf

Scroll down this pdf - you will see 'open positions' listed - my, my, my sure are some big negative numbers there. But, as far as I can tell, these negatives, being 'open positions' are not included in Kim's 'yield' number.

How clever.

-ERD50
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Re: Writing covered calls
Old 12-11-2006, 11:26 AM   #36
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Re: Writing covered calls

Who cares how the yields are calculated or what's at risk. Let's revisit the basics of capitalism, not cap gains.

I'm fundamentally skeptical of anyone whose system requires you to pay them hundreds, let alone thousands, of dollars for them to share it.

If the system works so well then she'd be rip-roaring her way to millions on her own trades without ever having to be a vendor. Instead of wasting her time at sales seminars she could be tweaking the software to do its own thing, similar to Poyet's AI screener. And then she could be optimizing its performance from a tropical island somewhere while she gets on with her own life...
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Re: Writing covered calls
Old 12-11-2006, 12:19 PM   #37
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Re: Writing covered calls

Quote:
Originally Posted by Nords
Who cares how the yields are calculated or what's at risk. Let's revisit the basics of capitalism, not cap gains.

I'm fundamentally skeptical of anyone whose system requires you to pay them hundreds, let alone thousands, of dollars for them to share it.
Very good point, and I tend to agree. However, there could be a reasonable comeback for this:

She does not seem to be claiming returns that are far and away above the market returns, supposedly similar, but with less risk. So, theoretically, if I developed this system, but only had X dollars to invest, I could maybe make more money teaching the course, then I could from direct profits utilizing it with my own limited funds.

And if I tried to open a mutual fund, I'd need to disclose total returns

I suspect that your reasoning is correct, though.

-ERD50

edit/PS:

Quote:
How many people have taken your Snider Investment Method Workshop?

We have taught the Snider Investment Method to over 2300 people who have come to Dallas or Phoenix from 36 states, 2 Canadian provinces, Germany and France to learn the Snider Investment Method.
$3175 * 2300 = $7,302,500

That is 13% of 56 Million dollars. It probably cost less than that to run the classes. And no pesky 'unrealized loses' to account for.

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Re: Writing covered calls
Old 12-11-2006, 01:14 PM   #38
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Re: Writing covered calls

OK, I promise I'm going to stop now, but this was just too good to pass up:

Quote:

How did the Snider Method perform in 2001 and 2002?


When you publish performance data, it must be complete and free from bias. I began teaching the Snider Investment Method in 1999 and had students who were using it, as was I, during the period 2001 and 2002 when the market was falling. We cannot, however, publish that data because it is incomplete.

I cannot account for every single trade that every student made over that time frame. I also cannot guarantee that the results would mean anything because I could not guarantee that they used the method the way I teach it. In other words, it is possible they made errors or changes to the method on their own.

The track record that we are able to publish begins in September, 2002. It is complete and we know that it is made up of trades which were done in the proscribed manner.
How convenient that during a down market, their data is 'incomplete'. So what happened in SEPT 2002 that suddenly, her students don't make methodical errors? Coincidence? Funny that is coincides with a market turnaround. Or maybe not so funny.

'Complete data' would include 'total returns', like any mutual fund is required.

- ERD50
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Re: Writing covered calls
Old 12-11-2006, 01:22 PM   #39
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Re: Writing covered calls

Quote:
Originally Posted by CyclingInvestor
Both eventually got around to telling me about Wade Cook's foolproof
system of making 20% per month (neither had any real experience with stocks), which
they were just about to embark on. I tried to explain things to them. I think I might
have gotten to one of them.
WADE COOK Isn't he in federal prison??
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Re: Writing covered calls
Old 12-11-2006, 02:35 PM   #40
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Re: Writing covered calls

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Originally Posted by FinanceDude
WADE COOK Isn't he in federal prison??
according to wiki:
Financial and legal troubles

In 1987, Cook filed personal bankruptcy. Two companies he controlled, American Business Alliance and Monarch Funding Corporation, also went bankrupt that year. [2]

In 1989, Cook was charged with securities violations by the Arizona Corporation Commission. The following year, the Arizona Attorney General charged him with several criminal counts, including selling unregistered shares of a company he controlled [3]

In 1998, Cook won a settlement against self-help guru Anthony Robbins over his claim that Robbins had illegally used concepts (particularly the "meter drop") from Cook's book Wall Street Money Machine to create a financial seminar. Robbins agreed that he had read the book and met with Cook, but disputed the illegality of his use of the concepts. A jury in Tacoma, Washington sided with Cook and awarded damages in the amount of $655,900. [4]

In 2000, WCFC, a company which sold seminars on investing and offered subscriptions to a trading bulletin board service called the Wealth Information Network (W.I.N.), posted $1.7 million in trading losses [5].

On October 5, 2000, Wade Cook Financial Corporation agreed to a settlement with the Federal Trade Commission and 14 state Attorneys General on charges that the corporation misrepresented earnings potential. As a result, WCFC was required to set up redress program for consumers who purchased its products and to alter its advertised earnings claims. [6]

In 2002 the FTC brought new charges based on failure to comply with the previous order. [7]

In 2002, WCFC was forced into [Chapter 11]] bankruptcy by a group of its creditors, including several employees and indepedent contractors, who claimed they had not been paid for several months. [8]

In December, 2005, Cook and his wife Laura were charged with several counts of income tax evasion. [9] Both pled not guilty. According to court documents, the Cooks operated a fraudulent charity, ostensibly to benefit the Mormon church, but instead bought show horses, his and her Cadillacs, and a 40-acre estate. [10] The trial has been set for January, 2007. [11]

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