I, myself, found Pat's response to be mild mannered, so I feel the
urge to chunk out a few figures on this matter ......
Yes, it was, but it was a comment! Everytime I mention that theory of
buying and rolling a mini, I can see Pat's hair stand on end. It is
not that it is a bad theory, but the thought of the market tanking 100
or 200 spoo points while holding anything long is a bit more than can
be imagined......
OK, let's reanalyze your figures...not sure why, but why not?
PREM burn - 16 points per quarter, times $50, times 4 quarters = $3200
per year.
Loss of money market interest. $0, cause you have to put up the money
to buy the SPY so it is a wash. In fact, let's put up $10,000 flat,
buy one emini and 100 shares SPY. You could argue that the other
$5,000 and change on the mini could earn money market interest for the
year.....
But the kicker, the key is the fact that if the SPOO moves 50 points,
you get 50 times $50 or $2500 for the mini or 5 points on the SPY or
only $500.
Heck, forget the divids commission and stuff....minor. $2500 to
$500......forget about it. Done deal, buy the mini! :)
Of course, this assumes an up market, but over any 10 or 20 year
period the market is up an average of 10 to 12% so it is a slam dunk.
Heck, over a 10 year period compounded at 10% a year this is what I
get.......excel worksheet take over.....
Ta Da!
10% 10%
Start Emini SPY
Yr 1 1,000.00 100.00 100.00 10.00
Yr 2 1,100.00 110.00 110.00 11.00
Yr 3 1,210.00 121.00 121.00 12.10
Yr 4 1,331.00 133.10 133.10 13.31
Yr 5 1,464.10 146.41 146.41 14.64
Yr 6 1,610.51 161.05 161.05 16.11
Yr 7 1,771.56 177.16 177.16 17.72
Yr 8 1,948.72 194.87 194.87 19.49
Yr 9 2,143.59 214.36 214.36 21.44
Yr 10 2,357.95 235.79 235.79 23.58
Ending 2,593.74 259.37
Total Points 1,593.74 159.37
Times Profit per Pt 79,687.12 15,937.42
Less Premium (32,000.00) -
Less Commish (1,000.00) (20.00)
Plus Divids 300.00
Net Profit 46,687.12 16,217.42
Just call me Air Jordon.
-Scott |
