This thread reminds me of the book “life of Pi”?. The book opens as Pi talks with a reporter about an adventure he had long ago as a boy.  He starts the interview with the statement of “There is a God and I can prove it”?. Late in the book Pi recounts the fantastical story of a being thrown out to s...

That's a good point storm.  I never considered an all-in approach where an excercised option would take you down to zero.  I assumed that 100 shares might be smaller than 25% of your holding in that asset.  For example, one option might be 100 out of 400 shares of GLD in your portfolio. You would pr...

The approach I outlined above is the risk free approach to derivatives.  Given the limited time you would be able to use it then it might add only 20 basis to to your yearly retuns. I'm working on another approach to write options against the PP regardless of where the assets are in the bands.  I'm ...

Here are my thoughts on writing covered calls or naked puts in the PP. If they are written for a strike price that is near where you will need to rebalance then there is little risk.  You could either: 1) Pocket the premium if the price moves with you 2) Purchase the asset as the option is exercised...

The covered call might get assigned but that would be a small chance. Why do you think it would be just a small chance? If you sold a deep out of the money covered call then the asset might need to appreciate 20% in order to reach the strike price.  It would be rare for SPY, GLD, or TLT to rise > 1...

I just reread your reply Adam and now I understand what you mean.  Would you need to buy back the covered calls?  Couldn't you just sell some shares of the underlying and wait for them to expire.  The covered call might get assigned but that would be a small chance.

If I had 500 shares of GLD then I would only write one or two calls to sell off 100-200 shares.  This would put me back around 25%.  Adam...does it make a difference if your asset increases in proportion from an increase in price or a decrease in the price of the other assets?  I need to think on th...

Has anyone ever used covered calls or naked puts to sell or buy assets that are close to a rebalance point?  It seems like free money with little risk.  If, for example, GLD was 33% of your portfolio and would need to sell some if it went any higer then you could sell a covered call at a strike pric...

Here's one with the deepest in the money options. http://i1233.photobucket.com/albums/ff396/rick7654/pp-leaps-ditm.jpg This one is better but it performs closer to the PP with more risk.  There might be some opportunity to play the swings.  When the total of all three (spy,tlt,gld) are down big then...

Here's a chart for the backtest.  I pulled the data for SPY, TLT, and GLD from yahoo and computed the volatility and then plugged that into the options pricing formula.  I used excel for the crunching. http://i1233.photobucket.com/albums/ff396/rick7654/pp-leaps.jpg Stone...how deep in the money do y...

I ran a backtest to 2005 and the results did not look promising.  I'm new to options and the process to backtest options is difficult.  I started in 2005 with $10,000 and purchased at-the-money calls 1 year out at the beginning of each year and sold them at the end of each year.  I then rolled that ...

My advisor, although he's also a family member, ulitimately does what I tell him.  I just have to take the heaping spoon of advice every time I move against his advice.  No worries.  We all understand the playing field.  I started using the PP after 2008.  I was fortunate enough to recoup my losses ...

Moda, I completely agree that LTGB and gold are the secret to the PP.  I just think that most people won’t agree.  I get a grilling from my broker every time I buy 30 year treasuries.  If he wasn’t part of the family then I’d move along…but that’s another story.  My point is that selling the PP conc...

Don't forget the lurkers.  I suspect, like most sites, there are many people viewing without weighing in.  Me included.  Is the goal of this site to push PP out to the masses?  That will be a tough road.  Gold and LTB are a big turnoff to most people and the next big equity rally will shake off the ...