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<p>If that rectangle resolves to the upside, the target is $35 higher.</p>
<p>Ok…so how does selling iwm 200 iwm puts give you leverage? Are you going to buy calls too?</p>
<p>That same box is obviously present in iwm and you would be a lot better off buying calls than trading tna and with much more leverage than 3x, also with less risk.</p>
<p>With all the talk about potential things that can go wrong - Europe, China etc., its a bit surprising that nobody is mentioning N. Korea and that crazy guy - that would be a true black swan event.</p>
<p>Are you referring to me? In the previous post, I’m referring to just buying calls ie. investing in the market to beat the market etc not the selling put strategy that I use for income generation.</p>
<p>I’m not trading TNA. I bought it several months ago - haven’t sold any of it. I have my technical exit points though.</p>
<p>We’ve been through a lot of stuff that did go wrong. The sequestration, Cyprus, etc. There will be more problems in Europe. There are risks in China. North Korea - is it bluster or real? Does that nut want his country to be vaporized? Or is this the usual North Korea extortion tactic that they’ve used for decades? Except that nobody is really biting right now? NK should be a CC thread.</p>
<p>Doct…I am lost…</p>
<p>Probably my fault since we are talking leverage and selling puts…</p>
<p>^^ this what happens when we start losing our marbles (LOL!). Sometime ago, we had a discussion where I mentioned that I was looking for a pullback of 10% and I said I would go considerably long by buying calls. I also said that I would buy put spreads as protection and we discussed how Schwab treats buying stock and put protection vs buying calls and put protection. It turned out that it was advantageous to go the call route. I have a separate account that I just sell puts. So far this year that is my best performing account so you can tell how lousy I’m doing with everything else. I’m not retired yet so I would still go buying stock, calls etc and if the market drops 10%, I’m going to take advantage of it because I just don’t see any reason at this stage for a recession - bear market. That being said, we might get a smaller correction or perhaps none at all. I’m now contemplating layering in to the market with spy and iwm calls and buying some ratio put spreads. I may let myself get assigned on those so I’m buying at lower prices. I may do this every couple percent that the market drops and if it doesn’t, those would expire worthless. I was just thinking about this driving home so its not real firm how I would do this yet.</p>
<p>As far as NK is concerned, crazy people do crazy things and the US is apparently taking this more seriously than in the past. I don’t think the Chinese would take too kindly to somebody nuking their customers so perhaps they can keep a tight rein on this puppy.</p>
<p>We don’t have to use Nukes.</p>
<p>The customers that China would be upset about if they were nuked is the US not N. Korea.</p>
<p>Doct, when I ask you questions about trading during retiring or mention negative possibilities of a trade etc, I am not being an … I think you know that but I just want to make sure. Maybe my posts come off a little black and white or flat…or pompous or… Well I don’t know how they are interpreted. </p>
<p>The psychology of trading is so important. You are a smart guy. I think you can come up with strategies. The questions are how you handle the winning or how do you handle the losing? </p>
<p>That strategy you posted makes sense. But how are you really going to react if those ratio put spreads go against you? Are you going to be ok with owning the etf? By the way, I ask these questions of myself? I’ve been selling puts in appl almost every day, then Thursday I am watching aapl trade, and I don’t need a chart… I am watching…there is at least one big seller out there… And I ask myself this question. If aapl collapsed, and the puts went in the money, how much aapl would I be willing to own?</p>
<p>Not that much. Lol so I covered. I should never have sold that many puts in the first place. </p>
<p>So you… You have to decide how much you really want to own an etf if you are wrong? Only you can answer that. I think you can answer that. </p>
<p>I don’t know why you mentioned 200 puts in iwm, I going to make a wild guess and
say that is out of your comfort zone. So… Somewhere between 0 and 200 is the answer.</p>
<p>It is really easy to want to be long when the market is on a tear. When the market reverses and you are long because of short puts, and you are down on the trade , being long looks a little bit different. Only you can answer, “would you still want to be long?”</p>
<p>If the answer is yes go for it. If you aren’t sure, trade smaller.</p>
<p>That is my pompous answer to your post . Lol</p>
<p>Yes - I know the psychological aspects. I would not do that strategy in large junks but in small bits. I mentioned a long time ago that somebody I knew had put together a ladder strategy where he bought more of the s&p as it was going down and sold portions of it on the way up. Its called buying low and selling high. The amount he would buy or sell depended on how much the move was above the avg. volatility for some length of time, so if the market dropped 2%, he would buy twice what he would buy if the market was only down 1% for example. Over time this worked out quite well, I have his spreadsheets that outlined the method but I haven’t looked at it for a while. It doesn’t work well in a market that has a huge trend. My method is a takeoff of it except I think that the ratio put spread takes care of the trend issue particularly in an uptrend. I have to play around with this over the next several weeks but I have to get my taxes done first. The judgement as to whether to buy the etf if it is in the money depends on how I think the market is going. As you’re fully aware, there are a number of things to do with puts that end up in the money, be assigned the etf, roll it out to a lower strike price and later date or even roll it out at the same strike but a later date and collect the premium - something I’ve done a number of times. This is obviously a psychological and judgement call but I believe that the market will be higher than it is today at the end of the year with some hiccups along the way.</p>
<p>I think we all have to trade the way that we are comfortable trading. I have no problem with that strategy. Obviously… I like ratio spreads a lot. </p>
<p>If you have opinions, your trades should match your opinions. So if a trade you design fits your viewpoint, you should do it. </p>
<p>That is what traders are trying to do, isn’t it?Match trades to their views…</p>
<p>We are going to live a long time… Even you…</p>
<p>Why should we care about matching a performance of the s&p except to have fun? That is the downside of being a professional manager. Always trying to beat the market in whatever time frame. Why would I want their downside? I don’t get their fees.
Lets just make money…that will take care of a lot.</p>
<p>Well if I don’t post for a long time then I probably bit the dust</p>
<p>No… No biting the dust…</p>
<p>I think NJres trade is interesting…</p>
<p>You can control a lot of stock (or an etf) with cheap calls if there is a big move…</p>
<p>I wish that njres would explain the rationale of that trade</p>
<p>Interesting idea for capitalizing on contango in vxx. Is use of vxx as a hedge really popular? Doesn’t strike me as a very good idea, but given the huge daily volume, somebody must be buying vxx for something.</p>
<p>[Rethinking</a> VXX as an Equities Hedge | MarketSci Blog](<a href=“Private Site”>Private Site)</p>
<p>I’m thinking seriously about implementing the strategy outlined in the article on a small scale as a test, using spxs as the “hedge” (actually, I’m not sure that this is not more accurately described as a pairs trade). First, however, I would have to fiddle around on eftreplay to estimate the optimal ratios.</p>
<p>Eventually the volume in vxx will drop as people realize vxx is not the trading vehicle people think it is.</p>
<p>[SVXY</a> Basic Chart | ProShares Short VIX Short Term Stock - Yahoo! Finance](<a href=“SVXY Interactive Stock Chart | ProShares Short VIX Short-Term Futures ETF Stock - Yahoo Finance”>SVXY Interactive Stock Chart | ProShares Short VIX Short-Term Futures ETF Stock - Yahoo Finance)</p>
<p>The trade in the article is very interesting. You are going to lose when the market drops big, but most of the time, the trade is going to do well… </p>
<p>There is no law that says you have to be in a trade all the time…
I think the trade in the article can work…</p>
<p>How much does it cost to access etfreplay?</p>
<p>34.99 per month.</p>