You show me a NO RISK strategy and I will show you where the risk is. PERIOD. Even "risk-free interest rate" has risk should inflation eat away at the interest to a greater extent than you acquire a return. Then subtract taxes and you can be looking at a loss. Sounds like BS, but I would be HAPPY to tear it apart and look at it. Send it to me and I will be happy to find a hole. If NOT I WILL BE HAPPY TO pay a finder's fee of 50% of the profits to the creator of this alchemy of taking water, salt, hydrogen proxide and lead and making gold. KEEP IN MIND that Warren Buffett is the worlds second richest man on 37% compounding returns. If he made 180%, even starting with almost nothing, he would be a trillion. Do the math. FCXoptions makes a GREAT point when he said "it doesnt happen in his simulation, so it can't happen in real life". PAPER TRADING is a great tool to learn a strategy's strengths and weakness before putting real money into a trade. Some complain about paper trading being unrealistic - especially with options. I know one can get filled on a paper trade where they would not b filled on a real trade. But I just read a FREE paper this weekend (only 4 pages but good) showing how the knife cuts the other way too. THAT SAID... Send me the trade and I will find the hole in it. This is total BS. The guy who wrote this is obviously full of manure. If he was making 180% with no risk he would be doing it from his mega yacht and not have time to post here. His time would be absorbed by having to eat grapes from 10 women feeding him. But I do have some prime swamp land in Tijuana I can let go cheap.
Yes, but that is easily solvable: in practice one would use a cushion (ie. bands of say +10 cents and -10 cents or so around the initial price level... And: the stock won't stay all the time during the lifetime of the option at or around the initial price level, so that is not a real problem, IMO.
I vote this quite possibly the most ignorant thread ever posted on here ....or at least top 10...any 2nds?
botpro - stop talking about the PnL (you can borrow 100% of the money and you will get infinite % on your money...) think about the problem of the commissions and what to do in the crossing. covered calls is a simple strategy that could be profitable, but it has it's limits.
You are making some unfair conclusions and accusations without first having analysed the system. See posting #69 for the sytem, and maybe also posting #58 for an extension to it to increase the profit from 201% to more than 8000% p.a. I call it "an intelligent mathematical system", ie. by no means HFT or daytrading; but it requires fulltime monitoring 24/7.
Yes, you are right. Let's make this system possible to apply in the real market; that's my point. Imagine: some people have the infrastructure to apply it...
Here's v1.3 of the system: added extension #1 to the text, and fixed some typos: Code: AN OPTIONS SELLING SYSTEM THAT GIVES A GUARANTEED PROFIT OF 201% PER YEAR Author : botpro at www.elitetrader.com Version: v1.3: added optional extensions to the system (s. the end of the text) Date : 2016-04-17-Sun Rules of the options selling system with simple hedging: 1) The system consist of 2 parts: 1.1) sell a call option of European Style, and 1.2) go long the stock 2) The option position is kept till expiration 3) Simple hedging (not delta-hedging): 3.1) if stockprice drops below the initial price then close the stock position immediately 3.2) if stockprice crosses from below the initial price then re-open the stock position immediately Example: assuming InitialStockPrice=100, HistoricalStockVolatility=40%, using monthly options (ie. Expiration=21 business days) Selling 1 Call: Spot=100.00 Strike=100.00 ExpDays=21 HoldDays=21 EarningsYield=0.00% DividendYield=0.00% StockVolatility=40.00% --> Call=4.60 Put=4.60 Going long 100 shares of the stock: Spot=$100.00 --> CapitalNeeded=$10,000 Since it's an option of European Style, an early assignment cannot happen, which is good in this case. At expiration date: Regardless what the CurrentStockPrice or the CurrentVolatility is: we will keep the credit fully. The stock position serves us only to hedge our option position; it is not intended for making additional profits. Ie. we will not make any profit from the stock position; all profit of the stock, if any, is for hedging only. Profit: We used the usual 2:1 overnight margin of the broker. So we have a leverage factor of 2. Meaning: of the $10,000 only half of it minus credit / 2 is our own investment (this is the basis for the PnL calcs). CreditReceived = $4.60 * 100 = $460 MonthlyPnL = 460 / (10,000 / LeverageFactor - 460 / 2) * 100 = 9.64% AnnualPnL = ((1 + 9.64/100)^12 - 1) * 100 = 201.73% From these numbers the commissions paid has to be subtracted. Remarks: - It's up to you to apply this system in the market(s). - To get the hedging correct, one would need to monitor and if necessary trade the stock nearly 24/7 by using multiple exchanges around the globe. Ie. by this, one has to eliminate any overnight gaps in the stock price. - If applied correctly then the given guarantee holds, ie. 201% profit per year. - Using more volatile stocks and/or a shorter timeframe than the above used 1 month will give even more profit. - Regarding margin: you have to do the math to get the 2:1 margin. Ie. in this case you would initially keep only $5000-$460/2=$4770 plus commission in your account. The broker grants you 2:1 overnight margin (or 4:1 intraday margin). - The system is freely scalable to any investment amount. But the stock position should not be too big because it must be easily closable and re-openable; I would say the stock position should not be more than $50k. - For big money one would use multiples of such constructs, but then one should of course use different stocks. The following extensions are optional: -------------------------------------- Extension #1 to the system: Profit booster: How to make more than 8000% per year with this system: The smaller your own part of the invested total money is, the more the profit% will make up: Example: - let's say your own money is $1000 - borrow the rest ($3770) cheaply from friends or take a 1 month loan - let's assume you have to pay 1% interest for the 1 month loan, ie. $37.70 Now, your basis for the PnL calcs is your own $1000 plus the interest for the loan = $1037.70: MonthlyPnL = 460 / 1037.70 * 100 = 44.3288% AnnualPnL = ((1 + 44.3288/100)^12 - 1) * 100 = 8070.26% Extension #2 to the system: One can also try to make profit also with the stock position: <TBD> --- end of text ---
- Of course the system works also with Put instead of Call. Then of course the hedging conditions have to be reversed (see 3.1 and 3.2) - Of course one would need a "Pattern Day Trader" account for this system. Ie. in practice one would have an account >$25k... - I'm currently thinking about a new extension to it: Call and Put on the same stock at the same time... I think this could bring some more advantages... - The system will get this name: "Hedged options selling system sys14" - And there will be a combo-system with Call and Put for the same stock. It will have this funny name: "Hedged options selling system sys15 - There can be only one"