Retired, 450k fun money, lets see what happens - SPY Options

How so? He puts the entire 450k on the line each time.

 

When he sells the puts, they are cash secured. When he sells the calls, they are covered with his shares. He does not use any margin. That is what I mean by "he is not overleveraged". Of course, you can argue whether it is a good investment or not. But it is an investment in a diversified "long only" security according to your view, correct?

 

Exactly. ----he puts his entire balance on the line each time. ---Pretty risky.

 

Risky in the mind of a daytrader, yes.

 

I don't see this as a day trader mindset. I think there is a difference between a trading account and an investment account. Running the wheel on SPY is really just being long the index which is pretty normal investment strategy for long term plays. I believe this is 400k of fun money meaning it isn't needed for living expenses. I think the OP original intent is to just try and out perform the general index.

 

I'm looking to outperform the S&P 500 while maintaining the same risk as being long the index. I want to capitalize on the short term swings in the market and collect a little premium on the side.

I'm not expecting explosive growth or anything like that. This site probably isn't the best place to be record this journal as it is, by name, for elite traders...not elite investors. Either way its my attempt to grow my account.


+$1944
SOLD -12 DIAGONAL SPY 100 (Weeklys) 1 APR 21/26 MAR 21 390/389 PUT @1.62

 

Way too much work and there is very little chance of outperforming the market. You could likely just own the index and sell covered calls and do better with less hassle. For one thing, you'll be able to sell the calls before the premium drops, which it will in your strategy. There's no need to reinvent the wheel.

 

When the market crashes and he has the entire amount at risk, yes then he becomes a long term investor.

 

You should know stock market crashes don't happen often. The last major crash we had was last year during the height of the Covid scare. So what do you do in the meantime? Stay in cash? I don't think so.

 

It's not too much work at all. It's fairly easy to do unlike day trading, which you must be glued to the screen all day, watching your positions to the close of trading.