Post #3721 by rayvt on the Mechanical Investing board

Investment Strategies / Mechanical Investing ❤

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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.

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