What Option Strategy Do You Use?

[newwurldmn]

The most interesting part of the story was his compensation deal. In his last year at the endowment he earned about $15 million, but that created a political problem. So they had to let him leave, but compensated him by funding his HF to the tune of $500 million. By then multiple list and PfOF changed the landscape enough that his strategy lost about half its benefits. They still paid him a little over $10 million.

I did research him. He was one of the richest people in Boston. And then he left to be a football coach.

I remember reading his retirement letter as it made Bloomberg top.

 

[taowave]

What's the relationship between a stud value guy and newbs selling puts???

I get Buffets theory on vol,but I wouldn't say he's a premium seller

I did research him. He was one of the richest people in Boston. And then he left to be a football coach.

I remember reading his retirement letter as it made Bloomberg top.

 

[newwurldmn]

What's the relationship between a stud value guy and newbs selling puts???

I get Buffets theory on vol,but I wouldn't say he's a premium seller

I was referring to Jacobson. Jacobson was actually a long short event driven guy.

 

[ironchef]

There are more single leg option buyers on ET than I realized.

 

[zghorner]

There are more single leg option buyers on ET than I realized.

because it's comparatively simple with capped downside and crazy upside potential. Gain porn on WSB tapping into those get rich quick dreams probably has some influence as well.

 

[ironchef]

because it's comparatively simple with capped downside and crazy upside potential. Gain porn on WSB tapping into those get rich quick dreams probably has some influence as well.

As I recall, you are one of us.

The reason for the crazy upside is, like a black swan, it seldom happened.

And by the way it is not a get rich quick scheme because in real life the carrying cost for us retails practicing the art is significant. An analogy is venture/angle investing.

 

[bln]

CSP's worked well for me. I have used CSP in the past on SPX to harvest elevated volatility.

I did use a simple strategy.

a) cash parked in US T-bills 1-3m.
b) wait for -5% decline in SPX from all time high. ie:
trigger price = all time high price * 0.95
c) issue a ~90dte put in SPX at a strike price that is -20% below ATH price.
selected strike = all time high * 0.80 (step down until next available lower strike)

This worked well for me and come out at ~4% annualised return or something like that. And I would take delivery of SPX if needed and hold it forever or until exit price hit.

 

[Quanto]

This worked well for me and come out at ~4% annualised return or something like that.

Hmm. that's not much.
With stocks much more is possible, but stocks are of course riskier (more volatile) than the said SPX index.

 

[bln]

Hmm. that's not much.
With stocks much more is possible, but then stocks are of course riskier than such an index.

Depends on your objective. I had a bunch of cash that I know I wouldn't use to make a single trade or investment with for the near time. "I'm sitting on this pile of cash that I will do nothing with for the next 2-4 months. I want to stack some extra percentage points on top of what the US T-bills will give me".

It worked well for my short term objective that was to sit still on idle cash.

 

[cesfx]

CSP's worked well for me. I have used CSP in the past on SPX to harvest elevated volatility.

I did use a simple strategy.

a) cash parked in US T-bills 1-3m.
b) wait for -5% decline in SPX from all time high. ie:
trigger price = all time high price * 0.95
c) issue a ~90dte put in SPX at a strike price that is -20% below ATH price.
selected strike = all time high * 0.80 (step down until next available lower strike)

This worked well for me and come out at ~4% annualised return or something like that. And I would take delivery of SPX if needed and hold it forever or until exit price hit.

You mean SPY or ES?
Can't take delivery of SPX