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TMFTheDoctor (72.76)

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Using 100 delta calls for portfolio protection, part 2

August 02, 2010 – Comments (0)

This past Saturday I posted about using 100 delta calls on bond ETFs to get portfolio protection very cheaply. Historically, bonds have tended to be negatively correlated with stocks, so a half bond, half stock portfolio is one of the simplest ways of hedging a portfolio to reduce overall portfolio volatility and downside risk. However, the relatively low volatility in bond ETFs means that 100 delta calls can be purchased at strikes only a few dollars under the share price, meaning a portfolio could get the protection of a 50% bond allocation without having to allocate much more than 3% or so of the actual capital. Today I want to take that idea to its logical conclusion. Why hold shares at all?  [more]

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Using 100 delta calls for portfolio protection, part 1

July 31, 2010 – Comments (3)

I'm here to talk to you today about leverage, and about portfolio protection. Now we all know that leverage can be a bad thing, and that buying portfolio protection in the form of puts can start to add up to the point of being almost self-defeating. Using leverage to make money faster tends to be a great way to lose money faster, and buying at the money puts is a really good way to steadily lose money on premiums in up, down, and flat markets. So what’s an investor to do? One answer is to use leverage to buy insurance. Sounds crazy, right? Hear me out.   [more]

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Trying something different

July 28, 2010 – Comments (3) | RELATED TICKERS: SCHW

Checking my bit.ly stats, people only seem to be clicking on the one goofy link in my posts. That's a little disappointing, but at least I got a couple people to watch some Empire of the Sun videos. Anyway, I have exciting news!  [more]

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The Dalek Daily News for Tuesday, July 27

July 27, 2010 – Comments (0)

Basically there is nothing good.  [more]

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The Dalek Daily News for Monday, July 26

July 26, 2010 – Comments (1)

I missed a couple days last week due to family obligations. Fortunately I stockpile the stuff and try to only pick things with lasting relevance, or at least relevance that will last longer than a few days.  [more]

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