Options strategy to return 6.5% annum with low risk.

[tommcginnis]

Writing a naked put has the same risk profile as writing a covered call.
Do you see why?

And if the stock goes to $0, and your loss is $10,000, is there ANYTHING under God's Green Earth that would make your loss go to $10,001?

Do you see why?

 

[tommcginnis]

Hey OP, you've received some real, and distilled, wisdom here, but it's accompanied by a cacophony of noise.

What you seek is not hard to attain. But you have to be willing to find it, and to know it when it's on the silver tray in front of you.

Find someone you trust, and go from there.

 

[shMark]

There is nothing, because you would have to buy the 0 stock for 10,000.00. (I guess if you add commissions, it could go over 10,000.00)

 

[shMark]

With the OP definition of "risk fee" S&P 500 is risk free too.

I mean with preferred share you have tons of interest risk and OP don't even recognize it.

I recognize it perfectly. I can keep collecting my dividend if rates go up, and let my heirs deal with loss of value of the preferred stock. Also, preferreds don't go down that much in price usually.

 

[sle]

I recognize it perfectly. I can keep collecting my dividend if rates go up, and let my heirs deal with loss of value of the preferred stock. Also, preferreds don't go down that much in price usually.

You obviously do not believe in credit risk?

 

[shMark]

You obviously do not believe in credit risk?

I only buy investment grade preferreds, and check the rating every month. I also only buy cumulative.

 

[sle]

I only buy investment grade preferreds, and check the rating every month. I also only buy cumulative.

-- so if the rating falls for a particular name, you dump it? Doesn't that contradict your mantra that you never take m2m losses?
-- you do know that IG names have defaulted literally overnight with very little warning?

Not trying to be snide, just trying to give you a sense that there is no such thing as zero risk

 

[options_trader_europe]

I am a beginner in options, and was wondering if the bull put spread, and iron condor are a good way to accomplish the above, or if there are better ways.

Also, I wonder how much time it takes.

At present, I use preferred stocks, and close end funds to get those returns, with almost zero risk.

Thanks in advance.

look for double-calendar spreads. It is 2 calendar spreads for same underlying stock, one calendar spread with strike above current price of underlying, and another calendar spread with strike below current price of underlying. 6.5% per year is NOT a problem with double-calendar spreads... however, there are lot's of nuances in finding suitable stock (should consider iv on different months and lots of other small but important things)

 

[shMark]

look for double-calendar spreads. It is 2 calendar spreads for same underlying stock, one calendar spread with strike above current price of underlying, and another calendar spread with strike below current price of underlying. 6.5% per year is NOT a problem with double-calendar spreads... however, there are lot's of nuances in finding suitable stock (should consider iv on different months and lots of other small but important things)

Thank you.

 

[shMark]

-- so if the rating falls for a particular name, you dump it? Doesn't that contradict your mantra that you never take m2m losses?
-- you do know that IG names have defaulted literally overnight with very little warning?

Not trying to be snide, just trying to give you a sense that there is no such thing as zero risk

Yes. I do dump it. I have taken small losses before on principal, but the income usually is more than the principle loss. Yes, I do agree that there is no such thing as zero risk. If I said that, I misspoke. I should say low risk. In terms of IG going to zero overnight, thankfully that is rare.