When I actually did my income tax figures on options, I was amazed to discover that I had made what was (for me) quite a lot of money last year. This doesn't count holding some LEAPs that are not due until January 2001 and on which I certainly have some unrealized losses. But I am definitely ahead even counting those as total loss--and they aren't yet, and they still might well show a profit if these downdrafts continue. I think that what worked was buying LEAPs and selling every time I had a good profit. The volatility guarantees big swings--not doubles or triples, but regular short-term profits of about an average 25% which annualizes to a much higher figure.
Of course, maybe what I did was comparable to taking, say, $100,000 to a roulette table, betting only on black, and doubling up each time I lost, and then walking off when I was ahead $25,000. I don't recommend it.
The reason I didn't realize I was ahead on options was that I kept feeding money into margin to maintain a short XLK position. This acted as a kind of insane savings account, and as XLK has come back down I have put the money in an actual bank.
Pretty weird way of doing things, but these are weird times. I plan to hold that XLK short for a good while and may have to put money back into it to do so. |
