jazz4cash
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Curious to hear any feedback on this type of strategy.................
About 2 years ago I attended local investment co "free seminar" which featured a managed options strategy that was running 30-70 % return per year and got LT cap gains treatment........sweet. I put one toe in the water with IRA funds and waited (patiently) for my mega returns.
The stategy is to always sell short puts and calls on SP500 Options contracts which are usually 5-12 weeks from expiration. They mitigate risk by selling the contracts 5% or more away from where the index is currently trading, so there's very little chance that the market will move that much in 12 weeks. If it does, you can lose way more than the amount invested. To me, this was always very risky, so I at least I thought my eyes were open. The big gains come if the market moves up and down alot within a trading range. The mega returns never materialized, but the strategy did manage a tick under 1% gain per month from June 04 thru Sep 06 when I dumped it.........not bad.
The account pretty much went straight up (30%) until May of this year and then it bounced around a bit and I could see there was not adequate skill being exercised on timing the contracts, so it was time for me to exit. Also, I dumped it because it was a commision mill. They offered me an alternate commission schedule, but it was too late. I came to the conclusion that the option premiums required for the strategy to generate big returns were just not in the cards, so I was making 300/trade and paying $100 commission instead of making $700 or more on the same trade. Guess I'll go looking for something else, but I must say I AM sleeping better!
About 2 years ago I attended local investment co "free seminar" which featured a managed options strategy that was running 30-70 % return per year and got LT cap gains treatment........sweet. I put one toe in the water with IRA funds and waited (patiently) for my mega returns.
The stategy is to always sell short puts and calls on SP500 Options contracts which are usually 5-12 weeks from expiration. They mitigate risk by selling the contracts 5% or more away from where the index is currently trading, so there's very little chance that the market will move that much in 12 weeks. If it does, you can lose way more than the amount invested. To me, this was always very risky, so I at least I thought my eyes were open. The big gains come if the market moves up and down alot within a trading range. The mega returns never materialized, but the strategy did manage a tick under 1% gain per month from June 04 thru Sep 06 when I dumped it.........not bad.
The account pretty much went straight up (30%) until May of this year and then it bounced around a bit and I could see there was not adequate skill being exercised on timing the contracts, so it was time for me to exit. Also, I dumped it because it was a commision mill. They offered me an alternate commission schedule, but it was too late. I came to the conclusion that the option premiums required for the strategy to generate big returns were just not in the cards, so I was making 300/trade and paying $100 commission instead of making $700 or more on the same trade. Guess I'll go looking for something else, but I must say I AM sleeping better!
