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Everyone seems to believe that if you know how to do something that appears
to be riskless that you should be able to own the world. Number one, there
are position limits on options, whether you are a market maker or an
individual, so you can only do something so many times. The second point is
that one needs a degree of liquidity to be able to perform any trade. That
liquidity is distinctly lacking in many options, stocks and futures. Putting
a million dollars to work is no problem, but putting a billion dollars to
work is another story. To give you an idea of the difference. If you were
to spend $1000 per day every day of the year you would run through you
million dollars in about 3 years. If you did the same thing with a billion
dollars it would take you about 3000 years to go to zero. As far as owning
the world, what does that mean? One has to decide for himself, how much is
enough. When you have enough then you quit, sit back and enjoy life. That
is what I did 17 years ago. No I don't own the world, but I can do what ever
I want to do, whenever I want to do it and that is the same thing as owning
the world to me. I traded after I retired because I enjoyed it, not because
I had to. I stopped trading on a regular basis because of a heart attach. I
teach a little because I enjoy it, not to hustle bucks. So each individual
has his or her own agenda. What he claims to be able to do is doable. As
time runs out on his positions he has to be able to roll to the next set of
months using time spreads or have a broker that is sophisticated enough to
put the trade through with all four sides intact with the net credit
necessary. The minute one starts to leg the position there is risk. The
other thing that no one seems to have brought up is that he doesn't earn the
2.40 because there is still time left on the call when he has to make the
roll. So how much he actually makes is strictly dependent upon the value of
the call when he makes the roll. If the stock is at 60 the call is deep in
the money and there is little problem, he has to be able to sell that call
and then put on the spread at the new strike prices. At 20 he either
exercises the put and buys in the call or rolls to the lower set of strike
prices. This trade is far from riskless if you bother to think about it and
what can go wrong. You are better off writing covered calls on leaps if that
is the way you want to go. You can get 40% to 50% returns there if you
understand what you are doing. Hope that this helps you a little. Ira
TheQuant wrote:
> Hello Ira,
>
> IT> plus the 2.40 in premium less the cost of the put. Having been a
> IT> market maker, trading my own account and able to retire 17 years
> IT> ago, I think I understand options. Ira
>
> Ira, I appreciate you taking the time to explain all this. What I
> would like you opinion on is what he is claiming to do, doable? If so
> and it's that easy then how come everyone isn't doing it? If so then
> why haven't some old timers owned the world by now? What's Up?
>
> >> Ira,
> >>
>
> --
> Best regards,
> TheQuant mailto:thequant@xxxxxxxxx
>
>
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>
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