Options strategy to return 6.5% annum with low risk.

sle said:
-- 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
More...

In 2008, I had 3 well respected stocks go to zero, so I know it can happen.
 
If you're trying to diversify a little, you could consider trading options on non-equity ETFs while keeping the preferred investments too. Most small options traders like to stay on the short risk premium side, so if that strategy goes bad you'd not have all proverbial eggs in one basket
 
If you are happy with your current strategy, instead you might try a variance of Taleb's barbell strategy: keep 90% of your funds in your current strategy but take 10% to invest in options to juice the return (aim for >> 6.5%). Options are derivatives and leverage vehicles so if you "guess" right, the rewards can be convex, go up nonlinearly.

Regards,
 
shMark said:
Options strategy to return 6.5% annum with low risk

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

Zero risk? I'll let the numbers do the talking. Here are the closing high and closing low for some preferred stocks from 2008. I included all of the Lehman and Royal Bank of Scotland issues to see how bad it hit the fan.

I was net short a number of LEH issues the day they went under. Best day of my life in the market :->)

BAC-D 23.90 13.45
BML-G 19.75 5.50
DDT 21.24 4.80
GS-A 23.00 7.95
INZ 25.04 7.73
ISP 23.75 7.67
LEH-F 24.00 0.00
LEH-G 21.49 0.00
LEH-K 23.53 0.00
LEH-L 23.94 0.00
LEH-M 23.20 0.00
LEH-N 23.76 0.00
MER-D 24.72 10.30
MER-F 24.91 10.52
MSJ 20.40 6.91
MSK 19.65 6.79
MSZ 19.90 6.95
MWG 19.77 6.65
MWO 18.43 5.98
MWR 19.39 7.01
RBS-F 25.74 5.10
RBS-H 25.30 5.00
RBS-L 22.27 4.37
RBS-M 24.12 4.51
RBS-N 24.01 4.20
RBS-P 23.85 4.50
RBS-Q 24.95 4.34
RBS-R 23.52 4.16
RBS-S 24.66 4.36
RBS-T 24.66 4.36
VNO-I 23.00 10.80
 
You must log in or register to reply here.
Back
Top