The covered call makes more sense. No utility to vert it against the shares. No mention of why inter-mkt. Just dumb. At least the shares x double vertical makes some sense in SPY; in lieu of a synthetic straddle. Essentially an asym-condor with risk on shares.
Took me 18 seconds. $407 req. Will beat his return on req. No reason to trade it but it's not irredeemably stupid.
Arguments against the above... the otm call vert would be the revenue side, but it's all gamma. The itm call vert (synthetic bull put vert) is -edge on skew (again; otm call vert is the rev-side). So this (and his) is a dumb trade. Mine is the "lesser fool" trade. Lesser of two weevils (Master & Commander). SWIDT? Again, both are dumb. Add time. So it's ~18-20 cents in -edge, but it will still earn.
Yeah, it's slightly different than Covered calls. Just on a Quant basis. Not that it is an especially "smart" Quant strategy. Horrendous and inefficient use of buying power. If you were to ask me for details of what I do? Not that I'd give up much more than this, but a good (by good, I mean, 80 years of back tested in-sample, and 10 years of live sample data) Inverse Correlation Strategy, that gives five flying figs about Equities direction. Make that about 60% of the book, and then ... explain enough of it to your Clearing Firm to get a little relief, so you can scale up. This one, make the periodicity around a 20 day to 60 day window Then make about 20% of your book, a Dunn style, balls to the wall, get long, long, and then long some more, Directional outright, higher Volatility return Process that can Annualize 25%. Periodicity around 30 day window You have about 20% left? Give yourself 10% for maybe a nice Graham style Deep Intrinsic model you don't have to look at that much, and the remaining 10%, for Option Plays and you reach for 5% per month, on the 10% dedicated for Option Plays. The portfolio set up that way gives you tons of room for rebalances, and if you have to eat a -15% once in a while, on that 10% ... that's more than fine, because you have a ton of runway due to the capital in the rest of your Portfolio. As well, the longer-term stuff doesn't give you a lot to have to focus in on throughout the month; and frees up your effort. Little secret of the Strategy Development game? A) Have different strats, doing different things, in different periodicities and B) You should have some longer term stuff, because the longer periodicities are much easier to develop and test, and allow for a greater "Noise Ratio". The trick with your longer-term periodicity stuff, is knowing the Max DD's / MAE's, because those valley's are where you'll get in trouble, if it just so happens you are taking a hit on one of your other strats. There, now you know what I do for my Equities Prop. Well, as much as I'm willing to spill. Honestly, there's no real secret sauce; sans maybe some of the "bells, switches and whistles" I use for turning points. I'm not that special in that probably 25% of the Hedge Funds out there do something similar. Heck, Clifford Assness has discussed much of what they do, and different models they have. And I'm not telling anyone (Sans the L.S.I. that I demonstrate here) any directional outright models, or any inverse correlation arb strategy, nor am I talking about my longer term Equities stuff. In other words, I don't mind talking about the BROAD over-view. But any deeper than what I would have to put on a Tear sheet? Ehhh ... sorry. Game Theory for the win. All it's about, is setting up your own "Casino" games on your "Casino Floor", and you know the math of each of the strategies. But that is the long way of saying (I always have to go about things the long way) ... is that trust me .... what I am demonstrating here? Is the most basic of basic. There is a lot more out there for folks to discover. And yeah, you're right ... It's not Covered Calls (though it can look like it from a top-down view). In a way, I've never run this demonstration with this little of Capital, and am sort of interested in seeing the MAE live so I know how low it can be run before it's busted. So $5k is sort of an "off the top of my head" experiment ... As always, to see how we are doing on each process? Check out the tabs in the spreadsheet below. Thoughts, questions ... comments? Post 'em below! _______________________________ Simple Longer-Term Hypothetical Non-Correlative Strategy Processes: https://www.elitetrader.com/et/thre...ournal-that-shows-profit.337303/#post-4951437 Spreadsheet: That keeps track of each trade, each process, and then everything together ... IF YOU ARE ALREADY AN OPTIONS TRADER, Here is a Disclaimer: I know, I know, I know ... as well as a secondary ... I know ... I know ... I know
Equity prop in TN... said nobody, ever. This dude is a cautionary tale. PLEASE, someone give him $5K to trade so we can railbird the blowup!
Ironchef, no need to hedge yourself. Remove everything before the first comma, and everything after the first period.
The two best things to happen to me this week, were RaVar blocking me, and this arriving from Amazon. www.amazon.com/Penis-Enlargement-Pumps-Extender-Massager/dp/B00LM3MJXK
No worries mate, and trust me? It doesn't matter who you are, we were all at the amateur level at one point. Myself included. My partner's included. All with our own horror stories and bruises