william the wie
Gold Member
- Nov 18, 2009
- 16,667
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Right idea but I think you are looking at it wrong way around Flopper. It is avoiding the index losses that bring the higher returns. It turns out that lower risk equals higher returns and high risk equals lower returns. However lower risk is not the same as no risk and my portfolio is made up of optionable ETFs that at least have a sector risk of less than 1.
a 50% loss requires a 100% gain and so on. Looking over what I have I figure a 50% loss in the S&P will cost me less than 50% but if I write calls on the sectors that I own and out of the money puts on sectors I want to own and use that money to buy mini-S&P puts I can reduce my out of pocket losses by more than 50% to much less than 25% and possibly less than 20%. But I need a lot of uncorrelated sectors because useful idiots with money get somewhat scarce in the aftermath of a bear market. There is one hedge with a 28% house PC and I get to be the house in this case. I like that one a lot but I recognize that useful idiots with money get scarce in the aftermath of a bear market so I have other piles as well but I do love my safety harness while the good times roll.
a 50% loss requires a 100% gain and so on. Looking over what I have I figure a 50% loss in the S&P will cost me less than 50% but if I write calls on the sectors that I own and out of the money puts on sectors I want to own and use that money to buy mini-S&P puts I can reduce my out of pocket losses by more than 50% to much less than 25% and possibly less than 20%. But I need a lot of uncorrelated sectors because useful idiots with money get somewhat scarce in the aftermath of a bear market. There is one hedge with a 28% house PC and I get to be the house in this case. I like that one a lot but I recognize that useful idiots with money get scarce in the aftermath of a bear market so I have other piles as well but I do love my safety harness while the good times roll.