Are naked puts really this safe????

I'm so happy this was bumped. I stayed up late last night reading through.

This just goes to show you always need to quantify your risk, and if something's too good to be true it probably is.

I just don't trust other people with my money. I'd rather lose it myself :p
 
CAPTION THIS: "They are not risky because you can always cover the one that you sold and sell the following month thus not having a loss. "
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I would love to see someone try to roll that move. Those poor bastards are unlucky too, as usually you get a few nice years first but they got hit headon by the biggest blackswan (lehman) right after establishing the fund.
 
The fund is still alive, the investors decided that after around 90% loss, the worst already happened. The fund made some money over the past few month, but it is a drop in a bucket.

The worst thing in the whole story, that the lives of several families got affected badly.
 
I was surprised to see that a fund writing out-of-the-money puts on the S&P 500 actually existed.

It was proposed as a thought experiment way back in 2001, as an example of a fund that is guaranteed to blow up, but can make a lot of money for the principals in the mean time. See Krugman and follow his links for more details.
 
Quote from shorty735261:

I was surprised to see that a fund writing out-of-the-money puts on the S&P 500 actually existed.

It was proposed as a thought experiment way back in 2001, as an example of a fund that is guaranteed to blow up, but can make a lot of money for the principals in the mean time. See Krugman and follow his links for more details.
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"Capital Decimation Partners" would have returned 41% annual compounded return during 92-99. does anybody know the updated performance for this hypothetical fund that would include 2008?
 
There is another strategy based on writing naked puts that I believe can work consistently, whereby you short puts on the strongest stocks in an index and then buy puts on the index . The number of puts you buy is calculated based what % of the index the stocks you shorted make up the index. The math on the strategy looked convincing, but it required a substantial account for the margin.
 
Quote from chrismontez:

There is another strategy based on writing naked puts that I believe can work consistently, whereby you short puts on the strongest stocks in an index and then buy puts on the index . The number of puts you buy is calculated based what % of the index the stocks you shorted make up the index. The math on the strategy looked convincing, but it required a substantial account for the margin.
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Hi Chris, I believe the subject is naked puts!

Regards

Johno
 
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