I finally gave up my idea of selling OTM puts!

Discussion in 'Options' started by crgarcia, Jan 15, 2010.

  1. If you sell 30% OTM puts on SPY, Dec 2010, you get less than 1% premium.
    You get only about 2% for two years
    About 3% for 3 years

    Too low premiums
    Instead I'm going into top corporate bonds (Coca-Cola, Walmart, McDonalds, perhaps GE)
    I earn interests, and probably will have some (modest) price gains during the next panic.

    I'm not buying this overrun, overhyped market.
    I bought near the bottom, and profited nicely the last year.
     
  2. We are all very happy for you. Hooray.
     
  3. just21

    just21

    If you use span instead of reg t margin by selling options on futures on the Sp500 (es) you can sell more and increase your return.
     

  4. LMAO

    especially if the next panic is about speculation of one of these companies going bust.
     
  5. If the only possible way to make money in the market was selling 30% OTM SPY puts and the gain was limited to 1% per year then buying corporate bonds might make sense. But whadya gonna do if interest rates rise and your bond value drops? Hold on for X years coveting your meager yield?
     
  6. IMO this interest rates going higher is BS.

    Read why at:
    http://www.elitetrader.com/vb/showthread.php?threadid=188228
     
  7. Citing a chain that you started on the ECONOMICS bb here stating that interest rates going higher is nonsense aboslutely proves the point.

    Silly me. Good luck with your corporate bonds.
     
  8. 30% OTM? It's all time decay out that far...
     
  9. Being long bonds right now is IMO asking for a whuppin. The closest historical analog to Obama is Carter, and what happened to bond yields under him?

    Do you really want to bet on the parlay of low inflation and unattractive equities right now?
     
  10. Remember - bonds fall when any of the above happens:

    1) equities become more attractive (ie. recovery)
    2) fed rates goes up
    3) inflation goes up (due to substitution for commodities and currencies)

    If 2) doesn't happen, 3) will. Food for thought.
     
    #10     Jan 21, 2010