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Strategies & Market Trends : Selling Puts: Have Cash Will Travel
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To: OX who wrote (935)1/24/2000 10:46:00 AM
From: OX  Read Replies (1) of 1235
 
OT: long options...

Re: #reply-12479357
This is a followup to the above post from the CC thread.

taxman has a very intriguing strategy.
limited risk and unlimited profit, very sound fundamental basis, playing law of averages, and letting winners run.

I'm going to start doing this on a small scale and also start some paper trades. Unfortunately I don't have the proper data sources to backtest this properly but that would be an interesting exercise I would be willing to corroborate on w/ anyone interested.

Here are some additional parameters that others may find useful in following taxman's technique:

- 5 calls and 5 puts is a good starting point.
- buy all at once (once per quarter or so) or spread them out over the course of a calendar quarter.
- truly pick at random, or for me, I will reduce the list down to size and objectively apply DWA Point-and-Figure methodologies to whittle down to my 10.
- I will eliminate the ones that don't have 2002 LEAPS and only buy what is within my budget (note that taxman would buy the most distant options if LEAPS are not available).
- hold till expiration (this will be the hardest for me; I will be very tempted on winners to apply DWA's 'sell rules' :-)

libraries are a valuable resource and most have the valueline sources you need to get started.

A personal and public thanks to taxman for sharing his strategies for success.
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