billb123

How to Use Leveraged ETFs to Your Advantage

Great idea.

Stress Testing Your Portfolio

You guys have some misguided anger. What brought down LTCM was leverage and arrogance, i.e. that the 1% would never happen to them. The author is trying to get someone prepared for the highly unlikely. A tool like this helps quantify the risk that your portfolio is under. If you don't like the numbers, change your allocation until you are comfortable. Is a perfect predictor? No. Does it help gain some vision as to how one's holdings MIGHT behave in the future? Yes. Note: not affiliated with the author, don't use the product.

The OIL ETF Disappoints Investors as a Crude Tracking Instrument

I wonder how long before the ETFs with serious tracking problems are outlawed. This goes for leveraged ETFs and short ETFs as well. Most who are interested enough to look can see the problems, but I've run into too many people who dabble in this stuff casually who give me a puzzled look when I speak of tracking error. When they get wiped out, there will be an uproar, I'm sure. Ignorance of the law is no excuse, so they say, but ignorance of investment vehicles is somehow excusable and brings on legislation.

CEFs: Discount at Historical Average

Nicely done. Thank you for the information. It got me thinking about some open positions in CEFs that I currently hold.

60 Buy Write ETF Option Strategies

Why not use short puts instead of covered calls? Exact same risk profile. Then if your short put is assigned, you can write calls against it.

How to Use Options with ETFs

Covered calls also limit profit potential and that your underlying stock can be called away. A bit devastating if you wanted to hold on for the long term and the stock makes a huge run and you didn't participate in much of it because of the call.

It is 'no riskier' but the reward is limited. Limited profit, theoretically unlimited loss.

Protective puts are synthetic calls. If one does not understand that, don't buy puts until you do.

Naked put, great strategy if well understood. I would add that I only write puts on something I wouldn't mind owning. In other words, it should almost feel like a win-win. If the stock moves higher, you keep the premium, you win. If the stock moves lower and you're assigned, you hold shares of a stock you wanted at a discount. If you don't see it this way, don't use this strategy. Also, consider the put money as assigned until expiration to stay out of cash trouble should the market rollover on top of you.

Do you mean shorting by purchasing puts or selling calls?

Leveraged ETFs have serious tracking error problems, but options have time decay to contend with. Option buyers are generally losers compared to option sellers.

An ETF Options Strategy To Carry Forward Low Gas Prices

The problem here is tracking error. These leveraged and futures based ETFs aim to replicate the DAILY movement of the underlying. Once you start holding for longer periods, the tracking error inevitably gets you. So your "lock in" is not actually a lock.

However, the strategy that the author presents MAY offer some relief against the error in the form of time premium. Of course, the author is at risk of owning the underlying. Due to oils volatility, writing calls is probably not a viable long term strategy either. Imagine this scenario. You're assigned today, you write a call. No problem. Over the next month oil drops another 30%. A call above your assignment price is going to be worthless, so your only two options are to write a call that may lock in a loss or hold the underlying and pray. Naturally, you get some kick back at the pump, but I'm trying point out some nuances associated with this approach.