Well so a year or so since I started this thread, two of the three index-ETF's I bet against aren't substantially lower: QQQ is about where it was then, and SPY is somewhat higher. HYG (high yield credit ETF), however, is about 10 % lower.
Being stupid, I bought puts on HYG with strike date Jan '22, I guess they looked so much cheaper than the longer term ones that I decided to buy those and roll them. (Never did though!) QQQ & SPY I bought with strike date Dec '23. Sold all during autumn '21 for substantial losses. Time decay with OTM puts was worse than I realized -- I couldn't take the heat!
Lesson:
If you decide to buy OTM puts (or calls too, I guess), fully expect to part with the entire sum that you bet. Then be prepared to do it over again. It really should be like paying a continuous insurance premium. You don't stop paying it because the house is still standing, and last year's premium was thus "wasted"...
If I'd done the bet on HYG again, that would probably have compensated for the losses on both QQQ & SPY, as well as the earlier HYG bet, If I'd sold during March this year, for example. |
