How To Turn $100,000 Into $48 Million

Discussion in 'Trading' started by Samson77, Feb 28, 2004.

  1. No harm, I come off a bit harsh I realize, no insult intended.

    Not possible to earn a *consistent* 8% monthly in CC, unless your stock picking is excellent, but then you'd be better off simply trading spec.

    Stick to options-only, do not use stock. Look into convergence trades, discount arbitrage, etc... I am constained in what I can talk about publicly due to non-disclosure agreements, but read, read, read...

    #11     Feb 28, 2004
  2. 8% monthly returns on covered calls seems aggressive. But I suppose it's possible. However, Riskarb's more salient point is that a naked put is the synthetic equivalent to a CC. However, the naked put, even after setting aside the issue of lower transaction costs, presents a superior ROI to an equivalent covered call given the generally lower capital requirements involved in executing the strategy. Still, consistently attractive returns using either strategy are a lot harder to come by these days with premiums so low, as opposed to the good ol' days of VIX 30. So take any claims made by the covered call crowd promising a path to easy riches with a grain or two of salt.
    #12     Feb 28, 2004
  3. funky


    yeah that's a brilliant idea, wonder why i didn't think of it. 'unthinkable' pressure, every second of every day of the rest of my life! and to think that i was about to give up.

    thanks for that great article!


    p.s. i also like how steinhardt drops the us currency fishhook into the water right in the middle of the conversations....slick.
    #13     Feb 29, 2004

  4. Thanks for the input guys .... it's been awhile since I've followed option premiums, how difficult has it been to find 8% Call premiums over the last say 14 months on momentum Nas stocks?

    The whole premise of this service is this.

    1. Correctly Identify Market Tops and Bottoms.
    2. Invest in CC's with 8% premiums (max portfolio).
    3. Stay out of the water when the environment is to the downside or to volatile.

    If you score say on average 8 winning months and 3 losing and your flat 1 month you net 5 x 8% = 40% AVERAGE returns annually.

    Theoretically this seems doable to me .... What am I missing ?
    #14     Feb 29, 2004
  5. I am always amazed at how many people will sell calls against a stock without realizing it is equivalent to selling naked puts.

    RiskArb knows his stuff.

    I have tried to explain this to brokers and they look at me like I am from Mars (the planet, not the chocolate company).
    #15     Feb 29, 2004

  6. the premises are flawed and contradictory. identify market top but stay out when the enviroment is to the downside ??

    correctly identifying tops and bottoms is improbable on a consistent basis.

    #16     Feb 29, 2004
  7. Turok


    >Here is your formula for turning $100,000 into
    >$48 million, Michael Steinhardt style:


    >2. And you do this at a 30% average annual
    >rate every year for 28 years.

    Don't know if this is your math or his, but if you start with $100,000 and average 30% per year for 28 years you will have had to spent a WHOLE LOT of money on yourself (over a hundred mil) to only end up with 48 million.

    #17     Feb 29, 2004
  8. Turok it's a quote from the article (see the bottom).

    I guess the difference is Steinharts fee .... lol.

    If he can achieve that then I think he's worth it ......:D :D
    #18     Feb 29, 2004
  9. Marketsufer they use Bill O'neils methods to analyis these conditions they claim that by using Oneils methods one can be accurate up to 85% in finding the tops and bottoms.

    Any thoughts on that?
    #19     Feb 29, 2004

  10. honestly, i am not very familiar with bill oneil. i think its his canslim method they are refering to. many traders have been very succesful with the canslim method. i am not able to comment on the accuracy figures but they seem exagerated at first glance.

    surfer :)
    #20     Feb 29, 2004