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i would rather use a more conservative all weather portfolio and forget about it then constantly contemplating my next moves and when.
that is exactly why part of my portfolio still follows the fidelity insight models even after decades .
i would constantly second guess my last move and think about the next one .
i actually devote very little time to my portfolios themselves .
most of what i do is read articles from those who i find interesting to learn from but it has nothing to do with my portfolio . just about thoughts on retirement planning in general.
i got better things to do then try to time my way in and out which i learned i can’t do very well
You said that far better than I could have but I'm in the same boat with you. This seems an overly complicated and risky bet on a trader's hope of short-term market direction. It wouldn't be a fun weekend after getting a bunch of triple short ETFs put to me on a big down Friday.
It’s all about probabilities. And the probability of a big jump in the nasdaq is low imo when it’s already running hot, near its 2023 high, and fear/greed index is approaching extreme greed as the economy approaches a recession…
It’s all about probabilities. And the probability of a big jump in the nasdaq is low imo when it’s already running hot, near its 2023 high, and fear/greed index is approaching extreme greed as the economy approaches a recession…
How about the risk/reward of that strategy? While probability of a big move that works against your setup may be low, the damage if you're wrong for the short period you hold the position could be outsized and devastating depending on how much your exposure is. Seems like potential reward is small option premiums while the risk is many times that in losses. I wish you well and thanks for sharing your strategy as scary as it may be to some of us.
How about the risk/reward of that strategy? While probability of a big move that works against your setup may be low, the damage if you're wrong for the short period you hold the position could be outsized and devastating depending on how much your exposure is. Seems like potential reward is small option premiums while the risk is many times that in losses. I wish you well and thanks for sharing your strategy as scary as it may be to some of us.
The risk is low so the reward is low too. These sold puts returned an average of ~1.2% this week (I’m assuming they expire worthless because nasdaq futures are red again today).
The risk is low so the reward is low too. These sold puts returned an average of ~1.2% this week (I’m assuming they expire worthless because nasdaq futures are red again today).
Could you send me some of whatever you're smoking
If you want the puts to expire worthless, seeing the underlying in the "red" is not helping.
Quote:
How does a put option work?
Put options are in the money when the stock price is below the strike price at expiration. The put owner may exercise the option, selling the stock at the strike price. Or the owner can sell the put option to another buyer prior to expiration at fair market value.
A put owner profits when the premium paid is lower than the difference between the strike price and stock price at option expiration. Imagine a trader purchased a put option for a premium of $0.80 with a strike price of $30 and the stock is $25 at expiration. The option is worth $5 and the trader has made a profit of $4.20.
If the stock price is above the strike price at expiration, the put is out of the money and expires worthless. The put seller keeps any premium received for the option.
Efficient capital market theory says that security prices at any time "fully reflect" all available information. That means that the known or expected perturbation events of the market such as movements to bonds are already priced into the individual stocks and the market as a whole. This means that the S&P 500 is unlikely to be greatly impacted by this.
Also, the amount moving out of stocks by retirees is likely to be mostly offset or matched by others adding to their 401K as they approach retirement. And while those over 65 own some 43% of stock, most of it is concentrated in just a small percent that are not likely to need stocks to retire so much of the value is unlikely to move to bonds as their owners age. Much will eventually go to charities and their heirs - extending the timeframe significantly.
Frankly, the biggest reason not to invest in something else is because this has been shown to not get the returns that the market gets over the long term. Essentially this proposal is throwing out the higher expected return for the minor chance that the impact will drive the return lower than expected many years from now - not a good tradeoff. The value of the underlying assets will not really be changed by who owns them - it is still essentially the same companies so value will not decrease significantly as ownership changes hands to different groups.
As far as efficient market theory, I think the market will be more efficient in 100 years than it is now with more scenarios and data to pull from. Looking at the last year with bonds, it's pretty clear it's got a ways to go to being real efficient. But I think we're at an interesting point where outflows could pick up from where they have been, simply because all previous periods in the US market had a rapidly growing population so there's always been more contributors than withdrawers. It could be that the big players can roll on despite whatever the 60% remaining small players do and there's no impact.
I guess my main question is whether the S&P company index really has some 'special sauce' to make it have such good returns compared to other domestic and international counterparts or if it's just always had a bigger pool of stock buyers. We'll never know exactly, but it's something to think about.
FWIW, my own portfolio seems to not deviate from the S&P too much despite being kinda weird - Canada ETF, financials, small cap ETF, Latin ETF, lumber ETF, and energy. About on par for 1 year returns to the S&P too. My theory is I just don't want to be on the same wave as the S&P and NASDAQ cause my companies customers are tech companies. Basically just income and investment diversification.
Good lord, the puts are on a short ETF. Carry on...
I still want what your smoking, haha!
I don’t understand why that’s so crazy. If I’m of the opinion the market is more likely to stall or decline than to rise from its current level, why is selling OTM puts on a short ETF so hard to fathom?
The risk is low so the reward is low too. These sold puts returned an average of ~1.2% this week (I’m assuming they expire worthless because nasdaq futures are red again today).
whats the total net gain for your portfolio on this trade?
That's how you can really assess risk/reward
not sure if it was you, but someone on here took in like $42 on one of these , but because it annualized 1.1% or something like that they heralded it as some big win lol
insignificant gains like that effectively do nothing for the portfolio
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