CTA's were killed last week just like they were in the fall of 2008 because most sell options on S&P futures - leverage on leverage. There are dozens of CTA premium sellers doing this and even the ones selling spreads get killed.
The answer to your question lies in your statement "You can then just sell some otm calls on it and cash in month 2. And if it goes a bit too low just wait your time if you wish and start again." Had I been selling BAC or AIG premium a couple of years ago, I would be waiting until I'm in the next world to get halfway back to even. The method you describe will, however, work fine in a bull or flat market. So if you want to do it under other market conditions, you might try GLD, SH, or some such vehicle--not stocks. You can decide on an amount or percentage you are willing to lose and stick to it.
why they aren't selling calls for people with long positions? there a few retail selling it..but why don't you just sell the long positions..there aren't enough buyers for these call options which are rediculously priced...only someone playing spreads would buy them. options market is less than a billion on the table. i don't see why anyone would buy puts for protection they are expensive. wtf the put option is like 20% of the underlying stock for 6 months 'insurance'..you think their are idiots actually buying these puts for protection agains their long positions. options are b.s. okay..no money in options. very few participants. most of the options action is hedging for small players. all those book making games. and is purely gambling cause the market for OTM options is nill. no demand for it. how can you sell if their are no bids. like the longs can't sell their long positions in the open market. that is what happend last thursday...all the long positions put a stop and all the bids disappeared.
The May performance numbers will not be out until the first week or so of June. To give you an idea of what can happen to these guys, LJM Partners (manages over $180M) lost 72% in two months (Sept and Oct of 2008). He had been in the business for 10 years and was one of the top ranked CTA's based on average annual return over that period. If you want to see how they did look up LJM, Ace Investment Strategists and Ansbacher - they are 3 of the biggest premium sellers.
where can you see past performance on these funds. i used to follow ansbacher but he stopped reporting on the site i used after the crash of 2008.
Outsized volatility can def take you out in the mean time......just bc you have 100k cash doesnt mean your account isnt gone on just last week.