Yeah, I'm looking for a strategy to hold long term as well. I covered my QQQs today by selling Jan 130s for $6.50. I'll buy them back if QQQ is above $130 by January. Even if that happens, it'll be a 21% gain in just under 6 months.
Doing shorter term moves (2 months out) could be riskier, but it also could be more rewarding. If you look at averages, what's the Nasdaq done for the past 10 years? 15-20% a year? So if you buy x months out at y% premium for a z% gain, you should be able to beat that number. (Fill in the blanks). Yes, there will be times that you lose money or get called away, but in the long run you might pull out ahead.
Here's one specific idea I've been contemplating... Buy QQQs. Sell 1 year out covered calls that are 10% out of the money. These seem to get about 10% right now. So, if the Nasdaq does greater than 10% in a year, you're guaranteed a 20% return. 20% compounded yearly triples your money in 6 years. 12 years is 9x, 18 years is 27x, etc, etc. Of course, you'll be losing out if the Nasdaq does greater than 20% a year, but I don't think that's likely long term. And if you do under 20% in a year, say 10%, you've gotta pay taxes on the gain from the covered calls. |
