sean, in my original paper i suggested adding leaps ever 2.5-5% drop in the market. in the last revision i add new leaps only when the current ones do not provide sufficient short call premiums to meet my month income goal.
please remember about this strategy: I USE DIVERSIFIED ETF'S ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !
i do not factor in ups and downs when looking at my returns should there be a market decline because i am confident that over 5 years or so it will be back to my cost basis AND
that's why i consider it save to dollar cost average with the dls strategy. i would never and all experts would recommend not dollar cost averaging with an individual stock especially non-blue chips.
let's say etf is is 100 and i have 10 contracts it drops to 90 i add 10 more it drops to 80 i add 10 more it drops to 70 add 10 more so now if the etf rebounds to 85 you are at your cost basis for the leap calls ...if you owned the stock and did not dollar cost average you would be still waiting while i am not only collecting premiums but my leaps are appreciating.
do not dollar cost average with non blue chips individual stocks...drjoe
--- In ConservativeOptionS
>
> Dr Joe
> Please correct me if I am wrong, but U R advocating dollar cost averaging if the market falls by 7 - 10%(or at whatever level), & I gather ken adopts a similar strategy.
>
> However, big money manager and gurus like alan farley and mark douglas make a point that one is throwing good money behind the bad and that market can drop further than one has the deeper pocket.
>
> As you have been doing this practically, I am inlined to listen to u and others who put their money where your mouth is. How often does this dollar cost averaging work, and how often do u feel that a point has reached where u cant afford to put any more money in the trade?
> many thanks for the help
> sean
>
> --- In ConservativeOptionS
> >
> > ken, also my paper updated 07/15/2008 never mentions percentage drop to purchase additional leaps. the previous version did however. my paper states purchase additional leaps if the current leaps do not generate sufficient monthly income. this does usually happen around 7 to 10 % drop. drjoe
>
No comments:
Post a Comment