PS. With hindsight, I should have just gone short ARKK – it peaked just about when I bought my index puts, in Feb of '21...!
One thing I've learned about buying puts – you really have to see it as a cost. You have to 100% expect to lose 100% of the option. And you need to be prepared to roll them once they expire worthless. One should see them as insurance also in the sense that you pay a premium, monthly, quarterly or whatever. It's just an expense that you pay regularly (if you decide to pursue this strategy, that is; if you want to have an insurance policy in place).
Myself, I have decided to just keep cash instead, and then put it at play in undervalued situations when they present themselves. It suits my temperament better, I have found. I hate losing money permanently too much to do options...
I have, however, started shorting the stocks of some individual companies through (unlevered) certificates. The good thing about these are that they don't go to zero as quickly as OTM puts do – you don't have that time decay which I so dread. But OTOH they don't have the exponentiality on the upside, so risk/reward-wise they are an inherently inferior product.
The main problem, as I see it, with index puts, is that they are so expensive. Even very OTM puts cost a lot (for a thin wallet) if you want to have long duration ones. And short duration ones require a lot of upkeep – rolling them, etc.
I have just found that options aren't worth the trouble – for me. I'm not interested enough to learn enough about them. They're really complicated, to me anyway. |
