Invest your own money, let compound interest be your leverage, and avoid debt like the plague.
- Manlobbi
Investment Strategies / Mechanical Investing❤
No. of Recommendations: 3
No. of Recommendations: 3
He uses margin when put selling.
Harry Callahan, played by Clint Eastwood in the movie 'Dirty Harry', offered sage investment advice about this
"You've got to ask yourself one question: 'Do I feel lucky? Well, do ya, punk?"
(A 0.44 Magnum featured prominently in the scene)
A similar question can be asked about his use of a 'probability calculator', based on Black Scholes and its unrealistic assumptions.
No. of Recommendations: 5
Yes, there is always a problem with going short, whether selling puts or selling stocks short.
Your gain is limited while your loss is unlimited. all the handwaving in the world doesn't make that fact go away.
You only have to be unlucky once. Welcome to your new home, a cardboard box under the freeway overpass.
My take on the this 'probability calculator' is that it's just a way of fooling yourself to believe that you've limited your risk.
I keep in mind a long ago quote from roguetraderette (RIP):
"The Three Worst Investment Strategies Ever"
#2 Writing Puts: The problem with this strategy is that you make a few bucks that you get to keep if you’re right, but you lose your home if you’re wrong. Pretty crap deal, if you ask me. Selling puts for income is the worst strategy ever – you get a pittance every month, and take massive risk to do so. Added to that, the only way to effectively manage that risk is to spend some of that pittance on protection. Awesome.
No. of Recommendations: 1
Yes, there is always a problem with going short, whether selling puts or selling stocks short. Your gain is limited while your loss is unlimited. all the handwaving in the world doesn't make that fact go away.
How about this handwaving: I purchase a put. I can't lose more than the cost of the put. As an example I've done the following: For a stock trading at $7/sh I purchased an in the money put with a strike price of $12/sh for about $5.2/sh, which was the most I could lose. Most I could make, if the stock went to $0, was $12 - $5.2 = $6.8.
John
No. of Recommendations: 2
How about this handwaving: I purchase a put. I can't lose more than the cost of the put. As an example I've done the following: For a stock trading at $7/sh I purchased an in the money put with a strike price of $12/sh for about $5.2/sh, which was the most I could lose. Most I could make, if the stock went to $0, was $12 - $5.2 = $6.8.
???
Ok, so there are investment strategies where both your loss and your gain are capped. I don't see that as particularly attractive, but whatever floats your boat.
Youtube has some funny algoriths.
I watched a video the other day where he pointed out the fallacy of option strategies that had 90% winning trades but the 10% that were losers lost more than the 90% that had gains.
Now my youtube recommendations is full of option videos and ads touting "90% Win Rate Strategy for Options" and "90% Winning Forex Strategy"
No. of Recommendations: 4
so there are investment strategies where both your loss and your gain are capped.
Flying things, in general.
Butterflies and condors.
The condors are made out of iron, but I've never heard full disclosure on what substance the butterfly is made out of.
Condors are generally better picks for investment. Or falconry.
Getting fancy with options isn't always bad, IMO. I have one very big short strangle position at the moment.
Jim
No. of Recommendations: 0
I agree with Jim. I like to keep a broken wing butterfly on to hedge my long positions.
zeeko
