My Muse is a Short Options Portfolio

[fifthwave]

Hello Tim and members of the community,

I have been following Tim's Book for years now and I can say that it is one book that has changed my life.

For a while I have looked for the way to find my Muse with its ticket to cool Lifestyle Desing. Now, after a while of thinking I have found it.

My Muse is constructing and managing a portfolio of Short Futures Options primarily.

The short options provide income, as opposed to other investments that could or could not appreciate.

I have my portfolio now in place and I have matched it with my Dreamline. The portfolio is successful in the first two months an I expect this experiment to be funding my Lifestyle Design in 2011.

I appreciate comments on this Muse Idea and I will post my advance on this project soon.

Regards,
FifthWave

[americanoracle]

"The short options provide income, as opposed to other investments that could or could not appreciate."

Hey fifthwave, I have about 15 years of option writing experience in futures markets and can assure you short options can also "not appreciate", you really need to understand the markets you are writing them against or it is easy money for a week, a month, a year, and then one morning you are bust.

I would not recommend this avenue to people without a very, very solid understanding of the futures markets. Happy to share my experience with you if have any questions, I probably been there done that.

Best of luck in any case,
J.

[Domer88]

Are you planning just to live off this portfolio, or is your plan to get investors? If it's the latter, the barriers to offering financial products are very, very high. Lots of government agencies to deal with, and you have to have certain certifications (or hire them) before you can be licensed.

[fifthwave]

@Dommer 88 - this portfolio is for me only. I have no intetion of getting more investors on board.

@americanoracle - thank you for your observations. You have a good point in that the options do appreciate or depreciate in value. I guess the main point is one that, with your experience, needs no explanation, they do provide income if risk is managed properly, like no other investment can.

But, I do not want to get into a technical discussion about options. I have 10 years of trading experience with stocks, bonds, and derivatives (futures and options) and an MBA in finance.

I am interested in your experience with writing options if are willing to share. If you can tell me about the most valuable lessons learned in your time trading, that would be great.

If you could also comment on why this idea can or can't be a muse as proposed by Tim, that would also be great.

Thank you for your feedback.

[americanoracle]

@americanoracle - thank you for your observations. You have a good point in that the options do appreciate or depreciate in value. I guess the main point is one that, with your experience, needs no explanation, they do provide income if risk is managed properly, like no other investment can.

But, I do not want to get into a technical discussion about options. I have 10 years of trading experience with stocks, bonds, and derivatives (futures and options) and an MBA in finance.

I am interested in your experience with writing options if are willing to share. If you can tell me about the most valuable lessons learned in your time trading, that would be great.

If you could also comment on why this idea can or can't be a muse as proposed by Tim, that would also be great.

Thank you for your feedback.

Hi fifthwave. Sorry for the late reply, I lost track of this thread. I will send you an email if that's alright, I think the best answer to your overall question would come in the form of watching my online course on futures options. I will send you a link, because I would love your feedback and I'm sure you'll find it useful.

Your MBA in finance scares me, because I have watched enough of them blow up to know that it is a false sense of security when it comes to trading- they do not teach trading in MBA school aparently. But your 10 years experience is a major plus. Yes you can use this strategy to generate passive income in a very muse-like way, if you have a mastery of the markets. I would not suggest any novices assume it is free money or a sure thing, or anything of the sort. Even with the knowledge it takes a lot of discipline, and the short options game requires infinite risk. I've seen hundreds of traders scalp premiums for weeks or months, some a couple years, get complacent and wiped out in a day by a black swan. There's some things you do not do- write stock index puts, for instance. Looks great but it is russian roullette in practice.

To cut it short, it's a great idea but make absolutely sure you know what you are doing and remember your ass is on the line every day you are in the market.

cheers...

[fifthwave]

Americanoracle,

Thanks for the feedback.

I would love to check your link but I did not get it. Maybe you can post it here.

I can only report that the idea is working. I will test it through 2011 and I think that this could be fully operational in 2012.

Cheers
Fifthwave