dixonge
Thinks s/he gets paid by the post
You look like Gordon Liddy without the 'stache. Good picture.
Ha
either that or the big floating head from the original Star Trek series
You look like Gordon Liddy without the 'stache. Good picture.
Ha
Self-portrait - built-in camera on my MacBook - no lights on in the room but the screen.
Thanks for letting me be snoopy. Very good picture for one taken from a computer.
Our account balance is now about 15% above the amount we have deposited. I have run projections out to the future using conservative monthly averages for both deposits and gains and we might be able to walk away from our jobs at the end of next year with over $150,000 in the bank. Further projections, assuming a cessation of deposits and the beginning of monthly withdrawals of $2000 still gets us to an account balance of $1,000,000 by June of 2014.
Glenn,
Have you decided what you are going to do about health insurance yet?
Concerns about catastrophic health issues are the main thing preventing me from implementing your [-]crazy, insane[/-] perfectly reasonably ER plan for myself. Even though I am currently in good health, I have quite the family history of heart disease, cancer as well as a few other obscure issues.
Thanks.
Careful, that WorldNomads only covers when you're traveling outside your country of permanent residence, and if you use USA as your permanent residence, they'll only cover emergency treatment and evacuation (i.e. they don't cover anything that can wait for your return to the U.S.). Or if you are planning to live in another country, again it excludes treatment in that country and excludes anything their "health consultant and your physician" decide can wait the 10 hours to return there.Looks like WorldNomads.com can give me and my wife coverage for about $86/month. They only cover those under 61 though.
Careful, that WorldNomads only covers when you're traveling outside your country of permanent residence, and if you use USA as your permanent residence, they'll only cover emergency treatment and evacuation (i.e. they don't cover anything that can wait for your return to the U.S.). Or if you are planning to live in another country, again it excludes treatment in that country and excludes anything their "health consultant and your physician" decide can wait the 10 hours to return there.
That's why it's so cheap!
I have run projections out to the future using conservative monthly averages for both deposits and gains and we might be able to walk away from our jobs at the end of next year with over $150,000 in the bank. Further projections, assuming a cessation of deposits and the beginning of monthly withdrawals of $2000 still gets us to an account balance of $1,000,000 by June of 2014.
Am I reading this right. With "conservative" returns you're going to turn $150K into $1MM in 3.5 years while drawing $24K per year?
You need an 80% annual return to do that.
For the last four months I have averaged a gain of 5% per month, including February when the markets were dropping like a rock.
Unfortunately I was still selling credit spreads on individual stocks, Apple in particular, and the volatility made it tricky. I lost 1-3% per month for Nov.-Jan.
In early January I ran across a service that provided some guidance regarding market direction and range and that utilized credit spreads almost exclusively on market indexes like the S&P 500 and the Russell 2000.
Volatility is what "makes it tricky", but w/o volatility, the premiums you get will be too low to make much money. VIX is at very high levels historically.
Of course, this means that this "service" knows something the rest of the "the market" trading options doesn't know. Otherwise, "the market" would not price the options favorably for you, if they knew the same thing you knew about market direction. And if you have some certainty over market direction, why not buy options rather than sell them?
Expect to see a reversion to the mean over time. You might make something slightly higher than Buy&Hold, but I sure would not expect 5% over the market each month for long.
Please report how you do each option period, it should be interesting. Good luck.
-ERD50
5% per month = 79.58% annual returns (1.05^12).
Will do - just reached 5% for June with a few trading days left to go.
Of course if I can sell less out-of-the-money spreads to get sufficient premium due to low VIX.....
And this is why most everyone with some investing experience questions the value of a service to be predictive over the long run. If 'a lot of people' use it, and it is no secret, then who are the idiots that are selling/buying these options at prices that are so obviously under/over-valued?Basically just using support and resistance and other indicators a lot of other people use. No secret sauce or kabbalistic formulas that I am aware of.
.The whole point of OTM credit spreads is to attempt to discern which way the market *won't* go.....on a bull put spread the market can go way up, or a little bit up, or horizontal, or slightly down and the put spread still expires worthless
What options are you trading? We are one week into a four week option period. Are you trading those weekly options, I think they were created about a year ago - I have not looked at those in a while? Or maybe you don't hold to expiry, and are just tracking month-month at EOM?Will do - just reached 5% for June with a few trading days left to go.
So over 30 years you should be able to turn $150,000 in to $6.8 Trillion (or roughly 20% of the then expected US GDP). Not bad. I wonder why no one has ever thought of that before.
Keep in mind, that in every trade someone is on the other side thinking that *they* are the ones getting a good deal. What makes you "smarter" than them (not meant to be a slam, just food for thought)?
I understand that - don't you think the odds/premiums are adjusted accordingly. I don't bet on horses, so my terms might not be accurate, but isn't that like saying "Hey, if I bet on a horse to show, my odds of winning are better, so it is a better than a bet on a horse to win"? But of course, the pay-offs are different, too. Is the track, or the market really going to give you a better deal on one trade than another? Why? And since the market is open (on each side), if one was really better, it would soon get bought up taking away the advantage. Unless of course, you know something others do not.
RE: keep us informed - What options are you trading? We are one week into a four week option period. Are you trading those weekly options, I think they were created about a year ago - I have not looked at those in a while? Or maybe you don't hold to expiry, and are just tracking month-month at EOM?
The trouble is, it can, and often does work for a few months in a row, which emboldens the player. But that can happen with a "system" on the roulette wheel too. But that nasty regression comes into play for almost everyone.
-ERD50
The good thing about this approach, relative to other outsize return ideas that have popped up from time to time on this board is that if implemented at a reasonable level, when/if it blows up, it won't destroy the OP.
Disillusion him perhaps, but not wreck his retirement or retirement preps.
Ha
heh, heh, heh - OK, I'll try to keep it light-hearted But, since you are posting and responding, you seem to be interested in feedback, so I'll give it. BTW, I hope it does not come across as argumentative, I trade options and I like to engage in debate on them to test/challenge my own ideas.First, you *did* see the title of this thread, right?
Well, insurance is sold (traded - there is a buyer and a seller) every day, and people who are honest and educated/honest with themselves realize that they will not, on average, make a profit. But they (and I), buy it anyway, in order to reduce risk. Now, the sellers expect to profit on average, I just don't think it is reasonable to expect a 5%/month profit in an openly traded product that does not have huge barriers to entry. Ill take a stab at a more detailed analysis of your post, but I gotta run for a while.... But I will add that measuring returns is key - If this is money that you would have just put into a Buy&Hold strategy on a SPY ETF for example, then you need to make sure you are doing apples-apples, and measuring against the returns that you would have gotten with the same amount of dollars at risk in the S&P (and count divs). Lotsa people trick themselves into some fictitious accounting here.Doesn't sound like derivatives in general would be a profitable field based on that. And yet they are massively traded every day.
Well, I'll try to give more details later, but I think you can wipe yourself out with this approach. It is unlikely, and I think it would *probably* happen slowly enough that most people would give up before losing it all. -ERD50The good thing about this approach, relative to other outsize return ideas that have popped up from time to time on this board is that if implemented at a reasonable level, when/if it blows up, it won't destroy the OP.
Disillusion him perhaps, but not wreck his retirement or retirement preps.
Ha
Well, I'll try to give more details later, but I think you can wipe yourself out with this approach. It is unlikely, and I think it would *probably* happen slowly enough that most people would give up before losing it all. -ERD50
I hope you do come back to it. I know nothing about it, but the little bit I read after the OP showed up made it appear relatively safe, unless done too big.
Ha
For example, my most recent trades were SPX Aug 780/770 bull put spreads for a credit of $1.20.
I got a small start on it. The "unless done too big" is an important piece, and where most comparisons fall apart, IMO. The big returns count on big investments, and you quickly get "too big" and take on more risk than a roughly equiv Buy & Hold. If you are taking on more risk, it isn't apples-to-apples.
dixonge, can you tell me the price/date of SPX when you placed the credit spread? Approx numbers are fine, it just makes it easier to put in writing with numbers.
-ERD50