That’s cool, thanks for pointing that out.

I was trying to underline the de minimus case for “Buy/Writes”, many people are incredulous when they hear the readily realizable returns that are available in a field that is usually described, if at all, as tooo Risky..

that one, that you point out is a decent example of ‘getting paid to go long’..

and, as you know, shorting the underlying, or buying back the option, is ‘the cover’ of the short Put position..

At current volatility rates, you can get returns of about 5% a month, depending on volatility, writing (selling) cash-covered puts.

For example, January HIG 17.50 puts are priced at about .90. 90/1750 = 5.14%.

Obviously, this strategy entails significant downside risks. But you knew that already.

you may care to add, the below, to your list of firms to check out:

http://www.icerocket.com/search?tab=web&fr=h&q=Interactive+Brokers

I have an ETrade account and a Vanguard account. I’m in the process of moving everything to Vanguard and have started to trade with V but the commissions are 3-6 times that of Etrade.

is, truly, telling..the recent ‘rally’, from a Price perspective, does, indeed, look nice, but, from a Volume perspective, it looks like it has all the ‘Classical’ hair of a ‘Bull Trap’..

with that, if someone knows something different–about ’strong’ Rallies on weak Volume, I’d like to learn it..

with this: TrickStar Says: January 5th, 2009 at 6:34 pm

TrickStar,

With traditional Buy/Writes, even in this, current, low-interest-rate, lessening Volatility, Environment, I’ll, still, submit that double-digit rates of return are realizable–especially if one is Shorting Puts to initiate the Long Equity “Buy” portion..

with additional Leverage, as always, the dual-edge Sword comes to play..

Leverage, or no, Options, or no, it is, as BR, his ownself, rightly, points out, Tight Stops are Key..

To fool oneself into thinking that you can predict when a trend will begin and also where it will take you to (and when) is equivalent to predicting the future — it cannot be done.

If you’re going to rely on timing, then you plan on being eager to reverse on a dime, and must have an extreme amount of faith in your timing signals. If you’re going to rely on valuation, then you must be willing to ride along through (potentially) long periods of market madness, before the markets eventually seek out your levels of valuation. Faith is required in either circumstance, or some guidelines that take one out of the game when it becomes too chaotic. That’s what cash is made for.

Mixing the two prolly invites disaster, as there will inevitably be times (lots of times) when the methodologies conflict.

Ancient Chinese proverb: Man with two watches never knows what time it is.