point taken
Writing options for a living
- Thread starter torontoman
- Start date
Hedge funds and managed futures funds all report returns AFTER the 2/20 has been extracted. Whether it's 2/20 or 6/50 - a la SAC - the returns are apples to apples. Many fundamental funds have long term holdings, long lockups and are very sensitive to the tax consequences imparted to clients. Further, many futures managers (myself included) only deal in commodity regulated products. These are 100% Section 1256 regulated and are subject to 60 long/40 short tax treatment, regardless of holding time. A client of mine who has a 35% marginal tax rate is guaranteed to have a maximum marginal rate of no more than 23% on his funds with me.
This doesn't get included in the reported returns and only the more savvy clients are even aware that the 2000 CFMA provides for this favorable treatment. I have to assume you are talking about no load mutual funds and not those that extract 5% for the privilege of opening an account? All asset classes have their place in the big picture, but it is important for clients to have enough facts about the alternative managers to be able to effectively compare them to index funds and mutual funds. To say the alternatives need to outperform 2 to 1 is comical at best.
If any funds changed hands between folks who met on this board, you can be 100% certain that it would never be disclosed here.
I came to this thread looking for some further info on trading Put Options. Started reading it but then realised that there were 129 pages. So I'm not sure if this type of strategy has been mentioned or not, and I would be interested to hear other peoples thoughts.
As I only trade the Australian stock market, the options contract is 1000 compared to the US of a 100. Also there are a lot of options contracts here that only have 25c increments. It is one of the biggest and most liquid options market after the US.
I have been reading up on a strategy where you write (sell) put options, and then follow this up with an order to buy put options to give you some insurance.
An example: XYZ stock is currently trading at $19.97. Write put options with a strike price of $19.50 with about 6 weeks until expiry date. Receive 35c premium. Then buy put options at $18.50 strike price to expire at the same time as above. These would cost you 4c, therefore you clear 31c minus fees. As we always receive the premium, our max risk has now been reduced to 69c per stock.
Obviously you want to select a stock that you believe will increase in price, so by the option expiry date, you are 31c in front without any further work. Now this will not always be the case, and the stock price may fall below $19.50. As I have no intention of actually ever owning the stock, there are a couple of strategies that can reduce the risk of being excercised even further.
This is just a quick and rough run through of the strategy, so please don't rip me apart just yet. Having said that though, I do look forward to other's comments. Cheers.
As I only trade the Australian stock market, the options contract is 1000 compared to the US of a 100. Also there are a lot of options contracts here that only have 25c increments. It is one of the biggest and most liquid options market after the US.
I have been reading up on a strategy where you write (sell) put options, and then follow this up with an order to buy put options to give you some insurance.
An example: XYZ stock is currently trading at $19.97. Write put options with a strike price of $19.50 with about 6 weeks until expiry date. Receive 35c premium. Then buy put options at $18.50 strike price to expire at the same time as above. These would cost you 4c, therefore you clear 31c minus fees. As we always receive the premium, our max risk has now been reduced to 69c per stock.
Obviously you want to select a stock that you believe will increase in price, so by the option expiry date, you are 31c in front without any further work. Now this will not always be the case, and the stock price may fall below $19.50. As I have no intention of actually ever owning the stock, there are a couple of strategies that can reduce the risk of being excercised even further.
This is just a quick and rough run through of the strategy, so please don't rip me apart just yet. Having said that though, I do look forward to other's comments. Cheers.
Not that I would take her money, but I doubt we are full of shit 
Besides, why give me money when I already say what position I am in LOL.....
Besides, why give me money when I already say what position I am in LOL.....
You are talking about vertical (credit) spreads and a few of us have journals that cover these strategies.
Vertical spreads for aggressive growth
www.elitetrader.com/vb/showthread.php?s=&threadid=63020
SPX credit spread trader
www.elitetrader.com/vb/showthread.php?threadid=49586
Not to argue with you, but wouldn't it be better to say that ETF's have "minimal" tax consequences. They do have about a 2-3% turnover don't they? So a very small part is still taxed at the long term rate, is it not?
Boone Pickins just stated today that 65% of his gains in 2005 came from long term capital gains. Your basic assumption that hedge funds PRIMARY gains come from short term gains isn't necessarily so. There are legit hedge funds out there that are true "market demons".
Just trying to keep it real.
Well there is an old saying:
An example is not a proof!
If I show you a hedge fund whose primary returns are short-term capital gains does that prove you wrong and the original statement right?
Also if one says primarily, it does not exclude all other cases. If I say NBA players are primarily tall, does that mean Speedy Claxton and Earl Boykins do not exist
An example is not a proof!
If I show you a hedge fund whose primary returns are short-term capital gains does that prove you wrong and the original statement right?
Also if one says primarily, it does not exclude all other cases. If I say NBA players are primarily tall, does that mean Speedy Claxton and Earl Boykins do not exist
Quote from optioncoach:
Not that I would take her money, but I doubt we are full of shit
Besides, why give me money when I already say what position I am in LOL.....
Donna, I`m not here to catch clients, but I am taking your words as nice compliment, thank you.
Coach, this is not pleasant occasion to say it, but being under criticism in your company is a great honor for me.
Maverick - you were banned from Elite some time ago for attacking people with no reason, right ? If you have a problem, find good doctor or some gangsta` chat for this type of conversation.