Capital protected ETF

traderjo said:
Some say If you go long SPY and hold in draw down you are better off than giving up upside at 9-10%!
More...
This product is designed for people who want to eliminate/reduce sequence risk. Another point to make is that SP500 has some yield but etf is based only on price change. That’s why I am watching the one based on Nasdaq 100 - CPNJ
 
mervyn said:
yes, these days even for a retail trader is doable easily, with self-discipline.

the general idea is very simple, $1k capital buys for example a 10s at 99.137260, you would have 86 cents left to buy spx calls with different tenors (assuming bullish, which is always the case), odte, weekly, monthly etc. some calls will win big, many will lose small, with either set profit target to exit or leave it to expiration.

even more aggressively, a 10s pays expected coupons semi-annually, you would expect 20 interest payments totalling $450+/-, pawn the 10s and spend $450 to buy more spx calls.

you still have 1k in the 10s.
More...
Sorry not sure I understand, what is 10S? and how are you left with 86 cents after buying 10s ?
 
mervyn said:
this kind of principal protected index linked note is supposed to be a structured product. i did this before the gfc, all had a redemption date, and not for retails. but obviously time has changed and folks get greedy.

you can do this easily yourself.
More...
suggestions on how to do yourself?
 
I don’t think it can be done at inception for zero cost. That’s why I think they are actively managing/hedging at least partially. If someone can show this structure at zero cost using retail platform, would be nice.
 
no, a fund needs a prime broker or two acting as countrrparty, the trades are otc or dark pool because the volume will overwhelm the exchange. for a retail, assuming you are trading up to few millions, few hundred option contracts are nothing.
 
You must log in or register to reply here.
Back
Top