And I'm not even against premium selling. I do it, I think its great. But its something I do with small size in a cash covered basis. I believe a lot of traders fall for fools gold by thinking there in something magical on it, then they overdoit. Thats when they get in trouble
Most of my positions are outright longs, the short puts are cash secured with zero leverage. I just think being leveraged after a 7 year bull market fueled by 0% rates with the Fed on exit mode is just a bad ideia. Even if it works
Fair enough. I don't disagree. >95% of my portfolio are straight long-term longs while the rest is my options play money. I'll likely increase my play money allocation, but that's another thread.
I believe leverage makes sense to be applied counter cyclically. You do it when the levered players are hurting and the margin calls are all over the place. When things are fine and everybody is drinking from the low rate kool aid, you save ammunition
For a vol seller I think it makes sense to compare his portfolio to the SPX if his portfolio will lose less money than the spx in various gap scenarios.
I will try to give you a screen shot of the analyze tab over the weekend. It's a busy one for me so it might be next week. Please help me to remember.
OK, so if we are now accounting for leverage, are we going to divide every future trader's P/L by 50-150, because that is the leverage they use? Also, how many hedge funds outperform the S&P without using leverage?