Wednesday, September 7, 2011


In life there are Needs (things we have to have to survive) and Wants (things we'd like to have). The same is true in investing. One wants to preserve the majority of one's capital, but can also speculate for higher returns with a varying amount, depending on the environment.
I just did a study on my DITM strategy from its start in early May, 2009 - ironically, just as the Bull market was starting. Since that time the S&P 500 has appreciated (in price) 32.1%, while my continuously improving and fine-tuning DITM is only up 17.2% - with much more safety, and a much better return than CDs, MMFs, and Treasurys.
With all hubris and schadenfreude aside, since the top of April, 2011, things are reversed: My two smaller family IRA accounts (the purest testing of DITM available) are Down 6.7% and 4.3%, respectively, while the SPX is down 13.1%. Ergo, I am able, so far, to nervously but steadily sail through the violent corrections day to day.
While most investors are heading for the doors, DITM is enjoying higher dividend % and lower entering prices on new stock positions, as well as higher volatility in selling both puts and calls. The hybrid nature (bondlike) allows me to focus on the constant payments, not the price.
Still fully invested, September's expiry will be interesting for both sold puts and expiring calls - in or out of the money.

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