Investing in SPY using dollar cost averaging, searching for ideas.

Quote from baro-san:

Long term hold is a good strategy only in a bull market. ET means elite trader, and an elite trader should understand such things as what strategy is suitable for what market.

Check Van Tharp's comment about buy and hold.
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No real ET would give 2 cents for what Van Tharp has got say about anything, or anybody else for that matter.
 
Quote from black diamond:

I am conveniently leaving out dividends and taxes and t-bill drag, but you get the idea.
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Well, anybody care to explain how the dividend payment in SPY translates into ES ? As I don't pay capital gain tax but get butchered with a 30% witholding tax on dividend, I would rather move to ES if the dividend payment translates into ES apreciation. Besides as I regulary pay margin interests on swing trades, the lower capital requirement for ES sounds good as well.

Also, are there any peculiarities regarding NQ vs QQQ compared to ES vs SPY ?
 
Atticus,

Can you please elaborate on this?

"Strike - premium = average price on assignment"

I would like to understand the details of the procedure to do it correctly.

Thank you for taking the time.
 
Quote from FreakofNature:

Atticus,

Can you please elaborate on this?

"Strike - premium = average price on assignment"

I would like to understand the details of the procedure to do it correctly.

Thank you for taking the time.
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I will give it to you in simple terms.


Risk can expand if he wants.




Instead of buying 100 spy last friday at the close at 118.12, you sell 1 aug 118 put for 2.30 or $230 - commission. If the market goes down and the put gets exercised your basis is $115.7 after spy gets exercised to you at 118. So instead of being long 100 spy from 118.12 you are long from $115.7. If the market closes above 130 then you get to pocket the premium and do not get assigned the underlying. You also have the choice of closing out the put for a profit if the market spikes in order to lock in profit from the premium and give you a chance to resell the put on the next selloff.
 
Quote from volente_00:

I will give it to you in simple terms.


Risk can expand if he wants.




Instead of buying 100 spy last friday at the close at 118.12, you sell 1 aug 118 put for 2.30 or $230 - commission. If the market goes down and the put gets exercised your basis is $115.7 after spy gets exercised to you at 118. So instead of being long 100 spy from 118.12 you are long from $115.7. If the market closes above 130 then you get to pocket the premium and do not get assigned the underlying. You also have the choice of closing out the put for a profit if the market spikes in order to lock in profit from the premium and give you a chance to resell the put on the next selloff.
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If the market shoots to 130 i made a maximum profit of 230.00 on 1 put.

Had i bought 100 shares of spy at 118.12 the profit would be 130-118.12 * 100, vastly superior to 230 bucks about FIVE times superior.

The profits are very much limited selling the puts if things go right.
 
Quote from FreakofNature:

If the market shoots to 130 i made a maximum profit of 230.00 on 1 put.

Had i bought 100 shares of spy at 118.12 the profit would be 130-118.12 * 100, vastly superior to 230 bucks about FIVE times superior.

The profits are very much limited selling the puts if things go right.
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That is the price you pay to hedge your downside and for getting the abillity to generate 1 to 2% monthly income premium on your capital regardless of where price goes.


And if the market falls to 105 after you buy 118 ?



I thought you are talking about long term investing and not trading ?
 
Quote from oldtime:



Last I checked, 1 ES is worth about 60k, so with 250k that's only 4 buys if mkt stays the same or goes up. Otherwise, it's just the magic of margin.

Same thing goes for gold. Never could understand why anyone would buy physical instead of just buying a futures contract.

But when it comes to math I'm not that deep, so like you, I'd be interested to finally hear a good answer.
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Oldtimer & Fre-Nature;
same reason why some buy silver, rather than a silver contract.

Not hard to find tax deductable businesses[plural];
so fed tax in non income tax states like[ TN,TX, FLA silver state...]isnt the only consideration. SPY Dividends arent really a game changer also..., but helps.

Same reason why /buy SPY [gold more so than gold contracts];
with the worse timing possible-gold investors with WORST timing possible-[1980 BUY HI]LOL. Trend /friend baled them out. How many would roll over gold losing long contracts, since 1980?????

Not against leverage, use it some myself;
magic of margin simply gets so many of them in trouble. Sure, magic of margin always wipes out the other guy, Right

:D

Save a % for some buy SPY/dollar cost average;
when its below 200dma, not that its an auto buy signal:D

Not a prediction; some sell SPY hard below 200dma:D Thats wisdom.
 
When “ traders” start talking about dollar cost averaging has an unequivocal message.
I hope all “ traders” will find a consistent method to stay afloat to retain their self-proclaimed social status.
 
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