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If it was a fund he could very well have been selling out the money calls against
stock positions. He probably would have used a volatility study, standard
deviation or other momentum variable to find the options to sell. He probably did
not ratio write and therefore remained delta long throughout the bull market. In
the event he was looking to add to a position, he could have sold puts. If he
didn't get the stock, he at least got the premium. This would enhance return and
if the stocks were called away there were plenty of others to go to or he could
repurchase those same stocks on a retracement. He could even sell at the money or
slightly in the money puts looking to acquire stock and pocket the premium above
the intrinsic value. There are many ways to sell premium and not have unlimited
risk. the biggest benefit he had is that he earned a fee for the money he managed
and participated in the profits on other peoples money. All supposition, Ira.
"Research Dept." wrote:
> Hello Norman,
>
> http://www.markbrown.com/rega.htm
>
> i would say norm that according to the above audited track record - it
> doesn't really matter what my super whiz employer was doing in 87.
> the numbers are there in actual net to the client profits.
>
> to be short premium does not mean he is always selling puts ok? in
> fact most of the money was made selling calls in a perpetual never
> ending bull market. so go figure. does that make sense at all? no
> lets hope not for the sake of that jet which cost 2000 grand an hour
> to keep in the air.
>
> NW> I wonder if your super whiz friend was short premium during the 1987
> NW> crash? I was at the CBOE during the 80s. I knew a trader by the name of Wa
>
> --
> Best regards,
> Research mailto:research@xxxxxxxxxxxxx
>
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