Hi colleagues! I found an interesting variation of Collar strategy. I wonder if any of you are trading this strategy and what are your results? If so, could you also describe what adjustments you make and when? Thank you! Here is also a link to the older strategy description. http://tradewins.com/newsite/jeffry-dunyon/golden-era-system-era-alert-service/
Frikken marketing -- just an art that I *do not* get. This explains entirely why my own wonderful system, investing in Software, Health, Information, and Technology ...just could not get off the ground, when I tried to market it (logically) as "My S.H.I.T. System" It just went nowhere! Even when I added the 10-year bond!! (I mean, if it was all so high-beta, right? Balance it out, right?!? Genius, right?!?!?) But nobody bought "My S.H.I.T.Ty System" either!! WTH; FML; Jeez. Marketing. It just ain't my thing.
Is your system long biased in these industries or was it primarily short S.H.I.T.? Given the long running bull market, perhaps you should have emphasized this to attract other net long investors who would have been attracted to funds with more positive sounding names like bull S.H.I.T.
How's he going to make any money? No matter whether the underlying is going up or down, he's losing money. He's reduced his risk true with the underlying but the short call would have to be so ITM to cover the costs of both the long put AND the long underlying which would've increased his chance of having his option called away if the underlying goes up. And then he will be selling the underlying at a loss when it's called away PLUS the loss on the long put. The risk to this strategy is even higher; it's guaranteed loss on both the long put and the long underlying when the underlying is going up and guaranteed loss on the underlying if the underlying goes down but since the delta of the underlying is always one, the credit from the short call and the ITM long put is not going to cover the loss if barely when the underlying goes down. And it's the same thing on the reverse when shorting the stock and buying the call and shorting the put.
The market has adjusted for the traditional collar, there are ways to tweak them depending on certain factors (greeks) to still make it work, but it's a grind because you are looking at like 15 percent annual return (albeit almost guaranteed 15 pecent). There are other really low risk high reward strategies if you can wait and be patient (a long time).
Well, probably you will notice here that people rarely give you specifics, that is for several reasons, one is that no one here wants to be responsible for someone loosing a lot of money by taking advice. I would start by asking you how familiar you are with the strategies everyone knows about listed on cboe and other places. Consider most strategies assume you are holding them until expiration, so you have to ask yourself, how closing them when and how early can you minimize losses, and can you combine strategies, and do plan to know what to do at least 3 or 4 moves ahead, it's just like a game of chess. It may take you a year or more of testing (it did me) before you perfect a mechanical strategy to fit your schedule and personality.
I look at his method. It is a covered call plus a protective put and roll when appropriate. However, gamma works against you when you roll a short call and long puts are usually quite expensive so after commission, I am not sure if you will net a profit. This guy reminded me of Terry's Tips. I read Terry's book (and visited his site) on claiming he could get 36% returns a year easy by trading calendar spreads. Looked good on paper and seemed a good system. I tried it, didn't work for me. There are a lot of folks touting their can't lose systems, like someone (J F is one) claiming since most options expired worthless, he made easy millions selling options instead, so buy his service and he will make you easy millions without you doing any work! Mom and pop retail traders like you and I keep looking for someone to give us a can't lose system so we can print money. But the old sayings hold true: 1. There is no free lunch. 2. If it is too good to be true, it is not true. I have been trading options full time since 2013 and I call tell you I am still a beginner and it is very very very hard work. Good luck.