Looking for a buy & hold expert.

Discussion in 'Trading' started by retire_by_55, Sep 13, 2008.

  1. I've found an autotrade service that trades wide and low iron condors. It loses 1-2 times per year for a 10 to 20 to 35% loss through trade management. Losses occure when the markets make bigger moves up or down. Otherwise it does well enough after fees to make it appear worthwhile. I've allocated 70% of one account to this strategy.

    The account is held 100% in cash so far. I'm not sure the exact rate it but the broker does pay some small amount on the cash. The broker will extend buy power to trade the iron condors for any mutual funds etc. held for more than 30 days.

    I'm trying to determine if there is something I can buy and hold with 2/3 or more of the cash that will provide a steady (5-7%?) return. Would be nice to find something that isn't likely to suffer a 10% drop at the same time the condor trades go south. Is there anything out there or should just I settle for the brokers money market rate?
  2. lehman aggregate bond ( agg ), 4.67% yield.
    tlt, 20 yrs treasury, 4.3% yield.
  3. How much is the average loss when the iron condor loses ? 10 to 20 to 35% what do you mean by that ? Is it just Iron condors or other combos/strats ?

    To answer your question: TLT and other long duration bond funds will expose you to a big move in rates. Not the best thing to do at this juncture I would say. I would stick to intermediate- short term bonds, but for government bonds yields will be lower of course. Add corporates to the mix then.

    your question seems to imply that you are looking for yield rather than B&H. Not sure where you can find yield these days ...
    Dividend focused mutual fund ? Reverse convertibles on solid but beaten down companies ? Investment grade corporates ? If you want a plain B&H strategy, diversification is the name of the game probably via index funds.
  4. Kicking,
    Thanks for the suggestions. All seem like good places to keep looking. I think you're right, I probably do mean yield. I don't know much about bond funds. I say buy & hold only because I lose buying power for the iron condors on anything not held more than 30 days so I don't want to do a lot of trading outside of the condors.

    To answer your questions... yes, only iron condors, just a couple per month held until expiration on good months. Bad months one year resulted in a 10% losses in two different months. This year has seen only one losing month (so far) but the loss was 35%.