On Jan. 4, 2013 when BIDU was at $102.82, I sold 20 of the 65-strike naked puts out to Jan. 2014
I received $320 apiece for them or $6,380 after commissions. Cash margin requirements at Ameritrade came to $19,400.
01/04/2013 10:30:34 Sold 20 BIDU Jan 18 2014 65.0 Put @ 3.2 6,381.51
Since that time, the stock has ranged between $83 and $111 and now trades at $102.67, virtually the same price as when I sold the naked puts. So with a flat stock, how have I done so far on this investment?
Well, the puts are now quoted at $140 bid, $150 asked and if I were to buy them back at asked, it would cost me $3,020 including commissions. So I hve paper profits of $3,360 which is a 17.3% nominal return on mny $19,400 investment for the 22.2 weeks that I have been involved. Annualized, the return is 40.0% or 3.33% per MONTH. And this on a stock that has gone nowhere.
You can go far and wide and not see returns like this for a stock that hasn't moved on balance. Only by selling deep out-of-the-money naked puts are such returns possible without the stock moving.
I had a colossal Eureka moment in August of 2011 and as a result, I now consider myself to be the very best percentage wealth creator in the land. Move over Bill Miller and other stellar market outperformers; you can't hold a candle to my performance in non-crashing markets. I earned 58% in a flat market on my entire portfolio in 2011. I follwed that up by a 42% overall return on the expanded portfolio in 2012 and so far this year I'm up over 300K or 32% on a beginning valuation of 952K.
These returns may seem too good to be true but I con tinue to show just how very true they are.
Why would I want to settle for a 25% return in two months when in 2.5 months I am actually up by FORTY-TWO percent on my BIDU holdings?
I got in at $84.85 on March 25, less than two points from what was to be the absolute low of $82.98. But instead of just buying and holding the STOCK, what I bought were the 50-strike call options all the way out to Jan. 2015. These options have a leverage factor of about 2 which means that over time I will do about TWICE as well as the stock does. In actual fact, the stock has risen about 21% from my get-in point but MY return is the above-mentioned 42%. That's right - my initial 300K investment in the BIDU calls is now worth 426K. You do the math.
Fatso has hugely underperformed his betters, ie everyone on the TYC, BVF & PFE boards, by trying to play Joe Options Genius since 1970. The fool has done nothing but lose, & were it not for numerous inheritances, would have been wiped out long ago & live on the street, instead of in his mom's shack in a crime-ridden former pig sty.
Well, it still is a pig sty, since Larda$$ exists there, further stinking up the down scale 'hood.