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Originally Posted by dixonge
Both would be more risk than buying straight shares of an index ETF.
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OK, I agree with that (although I think you reversed buy/sell on the put, or meant call). And part of my point is, when discussing returns, they really need to be risk adjusted to put them in perspective.
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All those money managers and fund managers and mutual funds are just useless?
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Now THAT is an easy one. They are less than useless. Odds are, especially after adjusting for costs and taxes, you will do better with the B&H index. There are exceptions, but picking the future exceptions is like picking an individual stock today that will outperform in the future. Again, they MUST be risk-adjusted to be meaningful.
There is probably a FAQ on this, or search if you want to go through thousands of posts 
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But I don't need the entire market to be 'blind' to what I'm doing, just one or two people at a time willing to buy what I'm selling. I don't care why they are doing it, and they don't have to be some gullible fool either. There are perfectly legitimate reasons for buying debit put spreads while I'm selling credit put spreads. Each month a different person can do so for different reasons. And they have been so far. And if that's crazy I hope none of us are ever cured! 
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But the "market" for these is not made up of one or two people. Even when there are few transactions, computers are monitoring that bid/ask in near real time and will jump in to buy/sell any imbalance before your fingers can hit "ENTER". Liquidity and supply/demand for options is fundamentally different from that of stocks. Because options do have an underlying component, the bid/ask (not the latest trade) will remain in lock-step with that, at least on liquid underlying components, like indexes.
It makes no difference what reason people buy/sell things - the market determines the price. Potatoes are $X/# at the grocery store - they don't care if I buy them to feed my family, or cut them up until I find one that looks like some celebrity and sell it on ebay for $1M bucks. And I don't offer the grocery store more than market price, just because I hope to make more. I pay what the market bears/demands, regardless.
-ERD50
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