Chasing unicorns?

Discussion in 'Options' started by spindr0, Aug 27, 2011.

  1. Looking for a conservative strategy that would provide a high probability of success with a low degree of risk where the goal is yield. Low risk is essential since I take risk on in my trading account. This idea would be for stagnant cash not in my trading account.

    I'd like something a bit cleverer than suggestions like sell deep ITM CC's (or equiv NP's), or sell deep OTM verticals. Or for that matter, do deep OTM iron condors.

    Conversions and reversals would be ideal but I don't have the time ineeded intraday to chase these since legging in is the only way retail gets them (me). In addition, even if I did, if I caught that bounce on the UL, it would make more sense to book it rather than be locked in for X weeks.

    For example, I've traded double reverse calendars in the past because I've seen 2-3X reward to risk graphs. The problem with these is that is the IV/price movement combo. Good on high IV if IV contracts, good on low IV if price moves and berry bad if you get the wrong one from each column.

    So, has anyone seen any unicorns? :)
  2. I use to see them all the time when I was hanging out on this forum.

    You know spindro, I lost money on everyone of those crazy option strategies I put on.

    And looking back, every trade would have gone better just getting long or short the UL and getting stopped out.

    I'm not sure what you mean by stagnant account and trading account?

    But if you want to reduce volatility in a trading account I can show you some option strategies that will at least reduce it to stagnant, and maybe then some.
  3. The edge on conversions relates to you ability to trade the underlying at edge, as obviously the opportunities in the space are proportional to prevailing rates. if you can leg into a conversion then you can profitably trade the underlying and avoid the complexity and pin-risk.

    I find opportunities every day. I preach against selling garbage because you're not paid to hold (garbage).
  4. sle


    Or it relates to your ability to arb your internal (treasury) funding if you work for a bank. Though these days arbing your internal funding as bad of a crime as mismarking your book.

    There are unicorns out there, though, as I said before, there are usually the size of a New York City roach :p
  5. sell cash covered atm puts on a basket of large/mid cap tickers you want to own for 6+ months, keep doing until you get assigned, then sell atm covered calls on them until it's called away. Change atm to otm as needed depends on your view of particular stock. It obviously depends on your stock picks and market crash will still hurt but overall pretty safe strategy without a lot of management. I been doing it for a while in my retirement account.

    Or a much better alternative, go into real estate investment :p Market is ripe for the picking with the high inventory and interest rate. Pick a good high demand location and get consistent cashflow from rents.
  6. Go short elephant shit futures. Sell them now when the supply is tight, then buy them back later when it's lying all over the place.
  7. Pumpkin futures as we're in harvest-season. Be sure to sell before the 31st.
  8. Yeah, I can imagine chewing up the balance sheet is a no-no.

    Along this line... get a job as a PM on the buy-side and cross trades with your wife's/parent's/GF's account. Another favorite would be front-running the floor-hedge, but alas those jobs have died off.

  9. The statement was stagnant cash not a stagnant account so please, keep your stagnancy to yourself :)

    I siphon trading gains off to another account. Since I'm not pleased with 1% MM, I'm just looking for something better to park cash in. I thought someone might have some viable yield oriented option suggestions but that doesn't seem to be the case yet.
  10. That's what I said in my OP. Since I'm already preoccupied with trading, I don't have the time for more trading :)

    With your option knowledge, you should have some suggestions for a high probability strategy for a low yield that has moderately low risk. Got milk?
    #10     Aug 28, 2011