Peter Spann Strategy, anyone made it?

[DaveJ]

Back to covered calls/naked puts...
I applaud fellow posters who have pointed out that the payoff is the same. I find it quite amusing for people to speak of the "psychology" of trading these positions. Same old "no i wont do naked puts, but i'd do covered calls" i've heard it so many times before and no matter how many times it is explained people just dont get the point.
Ask any decent options trader about synthetic positions and see if they trade it differently psychologically.

I disagree... but hey sounds like you know what you are talking about.

Psychology of the trade is a personal perspective... You can't say that people are wrong wrong wrong... To say that is naive. Next you are going to say that Technical analysis is crap, fundamentals don't work, the moon doesn't affect stock prices, and buying options is for losers because 80% of options expire worthless (which is crap by the way)... It's what works for that person.

We've all heard of sports professionals that wear the same 'j#$K-strap' or socks for every final because they think it brings luck. hmmm.

Someones perception is their reality.... If someone is more comfortable trading one instrument versus another, even though they may be the same/similar, it's their psychology, it doesn't matter what someone else thinks...

P.S. I've traded both strategies extensively... And i found the psychology very different. but hey that's my reality.

 

[Andrew_A]

Isn't the entire point that most people aren't made to be rational options traders?

Same payoff diagram but I fully understand why they aren't the same to trade.

 

[landlubber]

Horses for courses...

I never met anybody ( despite LOT's of asking....) who made real money out of Spann's option trading "methods". But we sure made a large heap of dough out of his "buy, renovate, hold" property strategy for which we are grateful. Horses for courses.

LL

 

[DaveJ]

I never met anybody ( despite LOT's of asking....) who made real money out of Spann's option trading "methods". But we sure made a large heap of dough out of his "buy, renovate, hold" property strategy for which we are grateful. Horses for courses.

Ditto... In Toto! I never understood how the two strategies went together.

 

[geoffw]

Ditto... In Toto! I never understood how the two strategies went together.

The idea of the share trading strategies was to provide income for the negative geared properties.

 

[mercurio]

DaveJ...

Naivety...ive traded options extensively...some posts here sound naive to me, thats why im posting.

I've seen too many tank out with covered calls, and many wealth gurus not discussing the risks enough (I personally dont know about Peter so no accusations here, but Jamie McIntyre...)

If you want to discuss the psychology of trading...thats a whole other disucssion. Everyone has their own way of trading, acknowledged...i dont remember suggesting my way is the holy grail.

Let's keep it to just the psychology of trading the covered call/naked put...yes i know of this psychology that a naked put "appears" more risky...i want to raise the point that the covered call is just as risky...no matter what your perspective/psychology on it is....it is this skewed perspective of risk that could get people in danger.

Theres more efficient and effective ways to derive income using options than the glorified covered call/naked put. Too much risk for poor/average reward.

For example, Ill throw out a suggestion, - a diagonal call -

Cheaper than a covered call, roughly the same payoff, higher yield.

My message in a nutshell....be careful and there are better alternatives!!! But be prepared to do the hard yards.

Good Luck!!

 

[oc1]

Theres more efficient and effective ways to derive income using options than the glorified covered call/naked put. Too much risk for poor/average reward.

For example, Ill throw out a suggestion, - a diagonal call -

Cheaper than a covered call, roughly the same payoff, higher yield.

You get the same yield if you buy a very leveraged warrant. End result is the same. With a diagonal call, the deeper you are in-the-money with your bought call the less leveraged you are. You should know this if you trade options.

 

[mercurio]

oc1

I was comparing the diagonal to a covered call

 

[mercurio]

oc1

You just proved my point...alternatives alternatives

 

[oc1]

oc1

You just proved my point...alternatives alternatives

Yes, I know that but you seem to view one strategy better than the other. It's the same in terms of return. You were arguing that it was more "efficient and effective" and that it has a better return. That's not the case. To make it safer you would buy a protective put with the same expiry date and price as the bought call. This applied for both strategies. Brokerage is cheaper with the diagonal call strategy, which is nice I suppose.

 

[mercurio]

oc1

When i was referring to efficient and effective option writing i had in mind other strategies -e.g. vertical spreads, calendar spreads, double diagonals, condors.
Mind you efficient and effective will depend on what the market is doing and what would be the most appropriate strategy is at that point in time.

The Diagonal call suggestion was meant as a suggested alternative to get some people thinking...by no means the preferred solution.

 

[mercurio]

Re-reading my post i can see how you came to that conclusion that i suggested the diagonal call is more efficient and effective.

Better make sure im more clear next time!!!

 

[Sunfish]

surely it can't compare to the hundreds of millions by the charismatic Chris Murphy who incidently is claiming the losses are Opes' problem and not his. Poor clients...

Any long time member of Australian stock forums will know Chris Murphy. Before I knew his name I knew he was dangerous.

Almost single-handedly he caused Stockhouse (a forum) to close down here. Posted as "meataxe".

 

[Sunfish]

Mercurio: I did an options course, covered calls, with Daniel Karcher. Would that be similar to Spann's?

I have never traded the system because I was concerned that covered calls limited the upside but still left you exposed to all the downside risks and the volatility we are experiencing did not come as any surprise to me.

Is there a "Options for Dummies" book?

 

[mercurio]

Sunfish

I believe Daniel Kertcher is part of the 21st Century crew...if you do a search i believe he used to be a real estate peddler with some questionable practices before he started teaching options, i do not know about the validity of the claims.

But a few good options books will give you the basics.....no need for thousands on seminars and "special" options software.

Get a good grasp of risk management on options..which will mean yes you have to have a good grasp of the option Greeks...sth not alot of option newbies tend to focus on.

Books that help (from novice to advanced)
1) Options by Guy Bower
2) Options as a Strategic Investment - Larry McMillan
3) Options Volatility and Pricing - Sheldon Natenberg
4) Options: The Hidden Reality - Charles Cottle

Avoid those "get rich quick", r"eplace your income instantly" sort of options books for now.

Any questions, id also suggest you visit Aussie Stock Forums website....there are VERY knowledgable options traders in there that will help you without charging money...you can also read their posts on their view of covered calls/naked puts.

Good Luck!!

 

[mercurio]

Some further information abotu Daniel Kertcher

http://www.clime.com.au/media/spruikers.html

I should stop this rambling...this is a property forum

 

[evand]

I remember stockhouse from years ago. How did he cause it to close down?

Almost single-handedly he caused Stockhouse (a forum) to close down here. Posted as "meataxe".

 

[Sunfish]

I remember stockhouse from years ago. How did he cause it to close down?

A lawyer with a bad attitude can stuff anything up. Do you remember Bonkers on SH? A decent guy, destroyed by Murphy. (That's my, personal opinion anyway). Lost everything, dog, house, wife, (in possible order of importance) and became a serial pest on stock threads for a few years after that.

 

[evand]

lol I wasnt that much into the share trading boards. Tho i did spend a bit of time on hotcopper for while.

Was meataxe a pump and dump merchant?

A lawyer with a bad attitude can stuff anything up. Do you remember Bonkers on SH? A decent guy, destroyed by Murphy. (That's my, personal opinion anyway). Lost everything, dog, house, wife, (in possible order of importance) and became a serial pest on stock threads for a few years after that.

 

[bonkers]

Hi Sunfish

A lawyer with a bad attitude can stuff anything up. Do you remember Bonkers on SH? A decent guy, destroyed by Murphy. (That's my, personal opinion anyway). Lost everything, dog, house, wife, (in possible order of importance) and became a serial pest on stock threads for a few years after that.

Hi Sunfish, I couldn't help but read, I am the same bonkers from Stockhouse, Meataxe was actually very good to me, ended up meeting him a couple of times,(he even offered me a job at one stage) I think he is a nice person. Back then I was under a lot of stress and I really did become bonkers!. Thankyou for the kind words.--Regards--BK.