I gave you an answer! Use the majority of capital for a CD and the rest buy a put, if you think the market is going down. At the end of the year, the worst case the put expires worthless and you still have your 20K from the CD. By the way, it's been known to happen for a CALL to expire worthless as well.
As I said I believe I have enough experience on different strategies of trading option. I have been trading stocks for 13 years and option for 7 years. I trade about 200 contracts a month. I know it is not a lot though. I was looking for a hidden gem idea that is bullet proof that I will get over CD rate and in the worst case, I will end up getting nothing. based on my experience ideas like selling covered Calls are not safe at all. It has happened to me many many times that I have bought a safe stock say at 21 and I have sold in the money Call (to be more safe) at the strike price of 20 for 1.5 and the stock has dropped to 17 !!!! or even lower. The best simple idea that came to my mind at the begining, was just to buy a CD and buy PUT or Call for S&P for jan 2008. Because of the comission, I can not get in and out of positions. My 401K is with Fidelity and the commission is not that low as I get in my IB account. By trading too much, I will make Fidelity rich.
Thanks. So far this has been the best idea that I was also thinking about it if you read my first post. Either buy Call or Put based on my sentiment would be a good idea. But I am still asking everyone to use my case as a drill to come up with better possible solutions, if possible.
Look here's the deal. If you want capital guarantee then you have to use a CD or some other risk-free interest bearing instrument. The rest is your risk capital and you can do pretty much anything with it. You can buy Jan 08 options, you can buy 1 month options, you can trade options on expiration Friday and etc. Essentially, there's no limitation to what you do with it, except that you cannot lose more than the given amount.
Ain't no free lunch. You've been trading options for 7 years and you can't come up with something? You honestly didn't know a collar or CD interest to buy long options was the closest answer to your question?
Read my first post, I mentioned that idea in my first post. That was not a new idea to me.I also mentioned that the problem with that idea is that you just do one trade and you will almost know the result by the end of the year. I was looking for more incremental gains with monthly trades. Thanks for letting me know that there is no free lunch. I also knew that. I am paying for my lunch by accepting to get out even and not making any money.
Good, just checking. Can't believe how so many people survived trading options without basic concepts. If you wanted a more active style, you can use CD monthly/quarterly/semi annually interest in whatever duration to buy long options. You aren't gonna get much for 20k, but that's the only way you can pull it off.