I have recently been selling more short puts and short calls. I think most of the arguments on this thread are wrong such as jimmyjazz: "The black swan pays every investor a visit when she decides to show up." The best way to deal with "imagined" black swan visits is to always buy stocks along with long puts. Does anyone think that strategy won't lose more money than long stock or selling puts to buy stock at a better price? I am posting because I think underneath this discussion is blind faith in formal mathematics. For example, I bet everyone here would agree that one can calculate from option prices whether it is better to sell near term 4-6 week from expiration short puts than long maybe 4 months options with maybe 50% less monthly income but more margin for error? My intuitive feeling is that in the first half of 2013, near term option selling worked, but I think now there is a new common stock price movement pattern with quick 10-15% movements that soon reverse. Recent examples are IOC and LINE. I claim this pattern can not be modeled mathematically and maybe is related to SOROS reflexivity or maybe it is caused by popularity of Tastytrade short near term options TV show popularity. Some of my recent longer term 3-4 out short option trades that have had lots of local but not global (fundamental) moves: 1) Short TSLA 200 calls - no danger of a buyout since TSLA market cap is higher than the auto majors. 2) Short EXAS 11 puts (see my previous thread). 3) Short HK 5 puts - lots of warrants convertible by hedgies Feb. 2014. I started thinking of this from hearing a physics lecture where the presenter actually said "galaxies can move faster than the speed of light provided that no information is transferred" is now part of the standard model (quantum mechanics model?). Duh? For me, David Bohm's view that the universe (human psychology of trading too) shows the qualitative infinity of nature.
You're taking my statement out of context. I was arguing that, for index investing, the PUT strategy was best of breed; in essence, I was making the same case you are.