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Mav: Please define "in size."

Well, since last April we have had one long sustained bull ride. Only the paranoid survive in options so I would ask myself two questions: 1) How did I do on a portfolio ROE basis versus, say, buying-and-holding the S&P500? Only if I beat this benchmark by a lot (to compensate for extra...

Legging in = speculation IMHO. Be prepared to do it successfully 9 out of 10 times and lose it back on the 10th. I've paid some expensive tuition on this lesson. On the other hand, I've noticed for the index options I deal with that if I try to shave a nickel or dime that I often get filled...

Regarding your SPX comment: was that the 1987 crash?

As long as you brought up efficient market theory... I did my graduate work at U of Chicago and got a good dose of it. I even went to the library and read Fama's doctoral dissertation where he laid it out. News flash: the efficient market hypothesis only refers to the expectation of price...

Wee, I don't really disagree but would say that your emphasis underplays the fundamental insurance-like characteristic of options. We might consider the case where an owner of a stock buys an OTM put as down-side protection. The stock rises to expiry and the put expires worthless. Both...

Who would sell them? Not retail traders, only market makers who would set very wide b/a spreads and upon sale immediately hedge with the underlying on the other side...sorta like LEAPs.

Also depends on what they're using for the risk-free interest rate.

To adapt what Churchill said about democracy: Capitalism is the worst economic system except for all the rest. The amazing thing is that over the last 50 years with all the problems you've outlined above and more, we have still managed to create more wealth than all previous history...

I'm not a raging bull, but I'll have a go at your challenge... First, an observation: the run-up in debt relative to GDP seems to have started in about 1982 and lasted through the 1980s and 1990s...that is, it was coincident with the greatest period of wealth creation the world has ever seen...

I don't believe he's playing the public...that kind of stuff has a way of leaking out and he's too smart for that. You may be giving him too much credit in another way in that I do not believe he is smarter (or even better informed) than the market (no one is). Rather he makes his money by...

Not me. I did have a look at the site and would be VERY careful. Anyone claiming 50% annual returns doing nothing but covered calls sounds like a con. Layer onto this the lack of any physical address or bios and I've seen enough. I wouldn't let them give me a cookie let alone give them...

Building on my first post in this thread... Gallacher in The Options Edge does an empirical investigation of this issue and concludes that 30% is a reasonable expected ROI. Max Ansbacher seems to do 20-40% ROI by selling OTM S&P options. I would not characterize either of these...

Well, that's me. I need the income and can't stand a negative expectation. However, I am acronym-challenged. Riskarb: what do you mean by LR, UR, URO and FI?

I second the motion.

My approach: 1) Only sell index premium. Market-risk (e.g., 1987, 1998, 2001) is enough to bear without piling on firm-specific risk (e.g., Enron). Besides the market won't go all the way to zero -- or if it does we have much bigger worries than the size of our portfolios. 2) Own ITM...

S&P 500 index options under SPX. Nasdaq 100 index options under MNX.

Ditto.

OK...they're lying too...hasn't been true for ANY of the three SOTU speeches by GWB.

What KTM said, plus, I suggest selling fewer options than you are long. If you sell as many as you are long and the stock moves hard in the direction of your long LEAP (in this case its a put, so down) then you can get in a position where you "lock in a loss" because the delta on the front...