Does it make sense to get into ETFs by writing puts on ones you would like to own, then writing covered calls to point of selling at a profit? Then, perhaps repeating?
Does it make sense to get into ETFs by writing puts on ones you would like to own, then writing covered calls to point of selling at a profit? Then, perhaps repeating? Does it make sense to you? Do you have the skills or are willing to learn the skills to make it work? Are you willing to take your lumps while you figure out how to make it work or coming to the conclusion you can't make it work? Also double check you ability to write the calls and puts on the ETFs you are looking at. The CME is not thrilled about people writing options on ETFs because they are built for options trading of the underlying assets of the ETFs.jack
Thank you for the thoughtful reply. Am definitely willing to learn, need to find out if & where permissible. Have thought about ETFs such as VIG, MGV, EEM, SCZ, KXI. Would be interested in knowing if anyone has experience to share, and preferred ETFs.
you might want to try herehttp://boards.fool.com/falling-knives-117341.aspx?mid=306773...or herehttp://boards.fool.com/deranged-monkey-criticism-117590.aspx...I'm not sure how many indexers are interested in using options. Most indexers are KISS folks. jack
Good perspective from Jackcrow! A few other comments:1. Might want to read this WSJ article:http://www.nytimes.com/2013/05/25/business/growth-in-options...While relatively little research has been done on the success ordinary investors have in trading options, analysis done for The New York Times by SigFig, a company that tracks 200,000 retail investors, showed that people who traded options last year received only about one-fifth the returns of people who did not trade options: 1.1 percent compared to 5.1 percent.You're swimming in an investment pool where EVERYONE else is probably smarter than you. What makes you not want to invest in the underlying ETFs or mutual funds that hopefully you understand better.2. You might want to try some of the free education programs at the Chicago Board of Options Exchange: http://www.cboe.com/AboutCBOE/Corporate.aspxInvestopedia has some material.http://www.investopedia.com/university/options/option.aspMotley Fool has an Options Newsletter/Service with education involved too. The first month is free.http://newsletters.fool.com/50/?source=ipesittph00000023. Unless you have been studying and buying/selling equities with success for years, my personal opinion is that I'd advise against options. BobRYR Home Fool
Thank you for responding. Realizing that everyone is smarter is why I purchased the fool option education and reccomendations package. With some attempt to include diversification beyond budget for options and stocks, ETFs are being considered.In learning that writing puts on stocks you wouldn't mind owning is a good way to get paid while waiting for a better price, and writing calls on owned stocks is a good way to get paid while waiting for a good selling price, I wondered whether that might also be a possible strategy for ETFs? I am very appreciative of responses from you and others.
Despite the poor performance of the average option trader, we do identify a small group of investors who consistently manage to outperform the others. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=965810Lynn, If you think you have a solid plan, and if you can afford the likely costs of the experiment, and if you know you have the discipline to set and adhere to performance benchmarks, then don't listen to the naysayers. Against the advice of the so-called conventional "wisdoms", I elbowed my way into a market in which Dalabr's 20-year studies clearly document most investors fail to achieve even 20% of the industry standard benchmark, and I came out a winner. Investing/trading success has almost nothing to do with being "smarter", and nearly everything to do with persistence and discipline. The odds of your succeeding at anything in the investing/trading world are about 1 in 20. But are you scared by those odds, or intrigued? If you think you've got an edge --or can create one-- there's only one way to find out. Write a business plan, fund it, and then put your whole being into making it succeed. Best wishes.
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