william the wie
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- Nov 18, 2009
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- #21
Since my primary objective is to not lose my money I hedge low beta issues against the S&P. While I make decent money doing this the main attraction is the huge margin of safety. When asked what I do in the market pretty much everyone assumes I day trade despite my explaining that I am doing the exact opposite. Here's how it works:That's so true. I'd love to see a tv show about day traders. I believe day traders all lose their money eventually. You can't beat the high-frequency-trading computers.We don't see the losers of stock pickers.
I write enough out of the money puts on low beta ETFs to pay for the lowest cost straddle in the XSP with no more than 8% APR in free cash flow over costs in case the straddle expires worthless because the market stayed within channel.
If the market goes up I have structural leverage out the wazoo.
If the market goes down I have 2 to 1 leverage working in my favor.
What I do not understand is who is on the other side of my trades committing financial suicide.