Comments on: With this Bear-Market Insurance, You Can Keep Riding the Bull

By: ken

ken — Wed, 29 Sep 2010 15:46:49 +0000

I have never traded options. In your example the S&P falls to 650. Isn't the only option in-the-money the 700 strike? If so, net profit = (1150 – 650) * 100sh – $5,180[premium] ~= $45,000. How did you arrive at $35,000?

The decline of the S&P is (1150 – 650) / 1150 = 43%. Your long ~$95K would drop to $54K.

So your net loss would be $45K – $54K = $9K => 9%.

What am I missing?

By: Wayne Bonin

Wayne Bonin — Thu, 25 Mar 2010 07:50:52 +0000

Could you give a symbol for this index? I have been searching for over an hour and can't find it. Searching S&P500 from my OptionsXpress account returns 13 results, but none of them have options past NOV 2010. The symbol that shows up on Google Finance from your link (INDEXSP:.INX) gets no results from OptionsXpress

By: Warren Beeler

Warren Beeler — Sun, 21 Mar 2010 20:06:16 +0000

I invested about 5% of each of my 6 portfolios in the RYURX about 2 months ago ant the last 2 days is the first time I have said thanks to myself.

By: Dan Morton

Dan Morton — Sat, 20 Mar 2010 11:59:49 +0000

On balance, this sounds like a good recommendation. My problem: my broker–guess who–the world's largest–will not permit such a trade in an IRA in which most of my assets are located. Oddly, they WILL permit the purchase of similar securities involving individual stocks, such as IBM. Their argument: your recommendation is too risky for an IRA, although in their convoluted thinking, the stock of an individual is less risky than an Index. Just proves once again, what they know about risk! They tell me that every other large broker of which they are aware has the same policy.

By: Irwin Margolies

Irwin Margolies — Fri, 19 Mar 2010 14:12:51 +0000

Your bear market insurance strategy is a good strategy, however, the strike prices you are selecting leave alot missing, ie alot of missing money. Using a start of around 1150 on the S&P, where we are now, if you bought puts at 700 and 650, you would incur a huge loss between 1150 and 700/650, so, how can you say that you would recover most of your market losses, plus have 35K in cash?.

By: MICKEY PETTIT

MICKEY PETTIT — Fri, 19 Mar 2010 13:54:43 +0000

I use Ameritrade, I am not sure where to find these units of a hundred put contracts each? I also assume that the 600 @19.90 and 700 @ 31.90 are 2 years out. Thanks for your time and reply. Mickey Pettit