Option Trading Articles: [ConservativeOptionStrategies] Re: Dr. Joe: Do You Have A DLS Strategy Using PUTS for Protection?

Tuesday, May 11, 2010

[ConservativeOptionStrategies] Re: Dr. Joe: Do You Have A DLS Strategy Using PUTS for Protection?

leo, just an addendum

since, my paper clearly states ...dls paper is an income strategy for retirement. it was not intended to grow a portfolio significantly , i try to generate just enough to meet my monthly goal and keep up with inflation which now is insignificant. if one had just a small account like 20,000 and is trying to make a million in a few years.....dls strategy is probably not going to do that for you.....this strategy is not a get rich quick strategy, but i believe it is a conservative strategy if followed per my paper, and here my disclaimer in my paper applies. i am not advocating this strategy just sharing how i use it. we all have different goals.......it the market crashed in 2008 and did not come back to current levels this strategy probably would be in trouble. but by using diversified etfs while gut wrenching at times i was confident. if these etf's did not come back i would have been still better off than most peoples portfolios and this country would be in trouble...drjoe

--- In ConservativeOptionStrategies@yahoogroups.com, "joe & leigh" <gass20@...> wrote:
>
> leo, people do double diagonals, dls on calls and puts at same time, some people do just put dls, some do just call dls....is one better than the other? don't know. depends on the person's experience.
>
> i've found i can do well with calls even during corrections. someone just posted asking how dls did during 2008/2009 asking for returns. % returns to me mean nothing. again that is just me. i have x amount of cash allocated to dls. from that i decided a monthly dollar goal. for me it is 5000 per month. for me to decide if dls strategy is a success is with a downturn was i able to achieve my goal....(MY GOAL, not yours)......and if you read my paper if 1,000,000 was assigned to dls only probably a 25-40% would be in the leap calls and the rest in a dls cash account to purchase just enough more leaps to sell short calls against to meet my monthly goal when there is a major correction. during 2008 and 2009 it was a success. when the market is trending up or flat i am able to generate 10-12,000 per month....during the 2008-09 ....i had to use the cash account to purchase additional leaps and had plenty of cash with alot remaining to generate 5000/month.....as the market has rebounded in 2009-2010 much more than 5000 is generated per month.....drjoe
>
> --- In ConservativeOptionStrategies@yahoogroups.com, "leobusc" <leobusc@> wrote:
> >
> > Dr. Joe:
> >
> > I was trying reinact the past week and devise a plan that allows protection for these bearish times.
> >
> > It really doesn't make sense to spend so much for home insurance and next to nothing for porfolio insurance.
> >
> > I think there is nothing wrong with setting aside 3-4% a year for protect against possibly 2-3 10%+ corrections in a year.
> >
> > My thought was to use your leap diagonal strategy only with PUTS. Buying a Dec 2011 (not sure of correct Delta) and selling current month PUTS against it. Adjustments can be made as the market moves up and down helping to take in more premium, cut costs and assure some added protection should the market go against me.
> >
> > What do you think?
> >
>