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Um. No. He blew it on nearly all of his threads. This is the 3rd recent thread calling for crashes that never came. And he is not “far ahead” of anyone who bought and held index funds. Anyone can come on here and claim anything whether it’s true or not. All that can be believed as true is what you actually post on here before it happens. Anyone can claim they made X return or claim they made a lot of money.
I have had only two calls to short the market, not 3. GET YOUR FACTS STRAIGHT.
Unlike the other guy you may be thinking of - Heart84 - who made a huge prediction for a crash - I didn't run and hide when it didn't happen.
We haven't made any real progress over the last 2 years. So I don't know if you can really say the bears are wrong. I mean yeah, maybe some people in here were screaming that the world was gonna end. But these markets haven't been easy.
The right way to do it is to buy a long dated put on the SPY around the 4400 mark. Make it one year out. This way you have some insurance in your portfolio for a drop. You can buy puts dirt cheap right now.
We haven't made any real progress over the last 2 years. So I don't know if you can really say the bears are wrong. I mean yeah, maybe some people in here were screaming that the world was gonna end. But these markets haven't been easy.
Actually the markets being flat over 2 years makes the bears wrong
Quote:
Originally Posted by ed06288
The right way to do it is to buy a long dated put on the SPY around the 4400 mark. Make it one year out. This way you have some insurance in your portfolio for a drop. You can buy puts dirt cheap right now.
Advising people to buy options is absolutely nonsense. No ne should make that blanket recommendation
the leveraged portfolio i am experimenting with now uses options and futures to create the gains of a 60/40 with a lot less volatility in a leveraged parity portfolio with 3x funds and managed futures
i would never recommend it to a sole here ..its not for the typical person looking to invest , i dont care what back testing on it shows or the work of cliff asness or hoffsetin
Well... the thinking is if you have a portfolio of only stocks worth over $200,000, buying a single put contract could hedge that. And downside protection is cheap now. Really just trying to take a more nuanced approach to being entirely bullish or bearish. Assuming you guys have some serious dough to work with.
But yeah, to the average investor just getting their feet wet with investing, buying options is a really bad idea. Along with buying on margin. You also wanna be careful on loading up on annuities, muni bonds, commodities, and leverage.
Well... the thinking is if you have a portfolio of only stocks worth over $200,000, buying a single put contract could hedge that. And downside protection is cheap now. Really just trying to take a more nuanced approach to being entirely bullish or bearish. Assuming you guys have some serious dough to work with.
But yeah, to the average investor just getting their feet wet with investing, buying options is a really bad idea. Along with buying on margin. You also wanna be careful on loading up on annuities, muni bonds, commodities, and leverage.
I am interested in using a put contract as insurance. Can you explain how to do it? I somewhat understand options, but I have never used them for downside protection.
I am interested in using a put contract as insurance. Can you explain how to do it? I somewhat understand options, but I have never used them for downside protection.
The reality? Don’t. It will cost you over time vs just staying the course
I am interested in using a put contract as insurance. Can you explain how to do it? I somewhat understand options, but I have never used them for downside protection.
You buy a put when you own the underlying. This gives you a right, but not the obligation, to sell at a certain price for a limited window of time. You lose out on the cost of the put, but if the underlying shares go below the strike price any damage below the strike price minus the up front cost is neutralized. Operationally, you sell the put rather than exercising because the remaining time until expiration has some residual insurance value.
The reason most people don't do this, beyond the complexity, is the cost. Let's take NVIDIA for example since you own it and crushed the 2023 stock picking game (and presumably crushed it in your real money portfolio too given the overlap) with the position. Buying a put to protect you through the next year at a $500 strike would cost $73.
So if you keep holding for the next year, you get whatever the stock is worth at the end; currently $495 but on December 20, 2024 who knows.
If you buy the put, you have a total payoff of the greater of $427 ($500 minus the $73 you spent up front for the option) or (stock price at expiry - $73).
You also lose money over time if the stock trades flat because the value of the option declines as you get closer to the expiration date (i.e. six months of protection is worth less than a year of protection). If the stock goes up, the put loses value faster. If the stock goes down, the put loses value slower or even increases in value.
There is also an attentional price; you need to buy the put and then remember to check in and exercise or sell it before it expires incase it is in the money. You also need to buy a new one if you want continued protection.
My own experience with options, for whatever it's worth, is that I made a few thousand more than if I was doing basic buy and hold but the risk meant I wasn't willing to set up a large position and the time bounded nature of it required constant attention and so it wasn't worth continuing to do in terms of extra cash vs time to manage, and that's a relatively positive experience considering it's zero sum.
Last edited by ALackOfCreativity; 12-30-2023 at 11:06 PM..
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