lol, FAST PANIC? whats wrong with you man? I never used the word fast panic anywhere. I never mentioned anything about the speed in which the drop happened. Its hard to have a debate with you because you change your positioning and distort the other persons views
And 2008-2009 was as far from a quiet mkt as it gets. The extra income from the 'no premium' calls (from the good div payer SPY), DID provide a downside cushion
Again, your own words: "The buy write index was down 39% in 08-09, thats less than the 57% of the SPX(and you just said that SPY is a good div payer). That could be the difference between a huge mistake/panic sell and someone sticking with a strategy (unless you want to claim that additional losses produce no extra pain)" Now Daal, you are not seriously going to tell me that the drop we had in 2008 was not a fast panic? LOL. Dude, we came off 40% in one expiration cycle after Lehman went under. If that is not fast I have no idea what kind of market you are referring to that would cause one to panic. LOL.
Listen, I agree with you that retail panics on the lows. We are 100% in agreement. But you are playing monday morning quarterback saying after the fact how people will feel long after having the comfort of selling juice all the way down. The fact of the matter is, in the moment no one is going to be able to look forward in time and gather their thoughts and find comfort from the .65 call they sold before the drop. Yes, long after the fact they will recognize they lost less money. But in the moment when Lehman is going under and the gov't is talking about shutting down, I really don't think anyone will be comforted by the .65 call they sold in MO when the stock has come off 10 pts in one month. Just my opinion, could be wrong.
When I think crystal ball, I think of back in the 80s of that ball that spins near ceiling of dance craze or that commercial of Village People buying it for some selling site? Yea, I love options, been using them forever to hedge for Long term Commodities, but past 3 years learning how to use them as outright profit vehicles. I use these Indexes to judge overall Trucking and Transportation. http://www.cassinfo.com/transportat...rtation-indexes/truckload-linehaul-index.aspx If the rates are headed upward means not enough drivers for the loads and rates goes up and pay goes up to attract people into industry. But Index seems headed down. Transportation Index http://us.spindices.com/indices/equity/sp-transportation-select-industry-index Considering most Indexes recently made now highs, but not Transportation Index of above, it is showing me it is weaker than overall market and just a matter of time for come tumbling down.
u guys will never agree on that, and Maverick will always insist selling option is crap. There is a lot of research available on the buy write index , or the PUT index on the CBOE website, one can check and decide for themselves if its better for them. One,s tax situation should have a big influence on that choice as well
btw There is also research on similar strategies but on individual stocks rather on index, and from memory the switch to individual stocks makes them less convincing
You missed the point of this thread. The OP was NOT speaking about the advantages of selling options, he was trying to make a psychological point. Can one buffer downside volatility with dividends and premiums to withstand the urge to puke at market lows. He was not espousing the benefits of a buy/write like you suggest. And I was not advocating against selling premium, I was making the argument that one, calls are already discounted for the dividend. And two, the benefits from such a strategy, of which there are some, are realized only with time and are not necessarily appreciated in the heat of the moment such as when a market is puking and the investor has to fight the urge to sell the lows.
Well, looke what I suggested in my OP "specially as that person accumulates dividends and premiums over time, it gives them the sense that the stock is a "cash cow" and its not a big deal to see a temporary drop." Do you want me to say that again? "as that person accumulates dividends and premiums over time". But of course, you take one month worth of premium and compare to a one month drop, or some other bs argument like that