I don't know of a more risk free strategy with returns anywhere near as good.
That is also what I am concluding, and would like to discuss this with someone like you who is following this strategy.
Following six months or so of failing to find a profitable, but conservative, way to play this market, I've been communicating with several individuals over the last week or two about a CC strategy. I've used options as leverage on long or short positions, but inevitably I wind up losing. And, like you, I don't have the time (or the desire) to watch the screen all day.
I'm still very much in the learning mode on CC's. But from what I have seen, the major risk to CCs is if the underlying vehicle goes into a sustained dive, one writes all the way down, then the vehicle either does not come back, or bounces back and one gets called at a low level. This is a serious risk with tech stocks.
With the QQQ at least one is playing a basket, and the probablity of either a sustained dive or a dive without bounce-back is lower than with individual stocks. And yet there is enough volatility to pay good premiums.
Not that this is risk-free, as the average p/e for the QQQ is probably north of 150. But, barring another April, there should be enough warning to do some damage control.
Have you thought about adding crash-proof protection on your CCs with long-term OTM puts? |
