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Subject:  Re: May want to re-think traditional allocations Date:  9/26/2012  6:42 PM
Author:  Dwdonhoff Number:  70967 of 98549

Hi Joel,
Interesting sales pitch. However, I have never heard of an IRA which allows the purchase of naked call options. Perhaps there is such a thing, but I doubt it. Therefore you will have to pay taxes on your gains and that is not mentioned in the sales pitch.
Self-directed IRA & ROTH IRAs allow options to be purchased.
(Not sure what you are referring to by "purchase of NAKED call options.")

Still, it might work, but it really depends on the pricing of 2-year options.
It works, and its easy to suss it out for yourself at
Run it on 1 year options for judgement.

You will have to pay a premium upon purchase, so the stock or index fund has to go up enough to make up for that, and that puts you at an initial disadvantage. After all, the stock can go up, but you can still lose money on the option.
No, you buy a call at the money, and sell a call out of the money (if you want immediate upside participation dollar-for-dollar or greater.)

And "Leveraged income residential real estate"? Great, but it certainly requires timing, as people who bought a few years ago know.
Oh HECK NO... today's buying environment is EXPONENTIALLY better than any time in the last 20 years, at least! Sellers are far more motivated, lenders are providing near-free long term money, private financing can much more easily be negotiated for what institutions won't cover (and again at firesale rates & terms.) Rents are on the hockeystick.

I own several properties at purchase basis from years 2000 to 2006, and although they're all cashflow positive in their status quo, they'd be roughly double the yield at today's pricing and lending rates.

Yield on actual cash (as well as yield on overall risk) is stronger now than in a generation, and all the present economic developments are improving the strengths.


I won't tear apart your response into sub-parsements... I'll simply say;
Leg #1 = the highest yield on a 'very high safety' portfolio. Institutions are getting 5-6%+ on their safe ports at present.
Leg #2 = bull debit call spread. You can go to the CBOE & price them out for yourself, its not rocket surgery.


I suggest you keep your speakers down at your employer's place of business if you're surfing sites you wouldn't want your employer to know you're surfing.
"Junk bonds" is your own suggestion, not mine.

This is done, done today, and done consistently.
You can say its impossible for *YOU* to DIY...
You can say its possible, but too expensive for you to DIY...
You can say its possible, but too expensive to have done FOR you...

But volatility (getting trapped to the downside of an unhedged trade) is a cost, too... its a cost of time to recover, and a 'surrender charge' if you have to liquidate for access.

You can't say reset-indexing is not done (it has been and is, now, and for years,)
I've yet to find anyone who can DIY cheaper than the firms offering it pre-packaged as a service,
(the parts to the whole are not rocket surgery... you can try it DIY,)
*AND* you can't prove it being safely outperformed by non-derivative asset allocation.

It doesn't have to be for everyone... you can hate it (knock yourselves out.)

For people who want zero market downside risks (or near zero, if not reserve-backed) with market upside gains, in a tax efficient account, this is the cheapest way to get it.

Dave Donhoff
Leverage Planner
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