Where did the 300K of alleged "CASH" come from? lol
>>Almost 300K IN CASH in the account plus another 66K in an annuity and an IRA to boot says I'd have no problem whatsoever paying off on the insurance. I don't abuse margin. <<
Almost half of that cash is NOT encumbered. It's considered to be a FREE CASH BALANCE and the brokerage is paying me interest on that money - even though the amount is a pittance at these tiny short-term rates.
Just in the naked put-writing portfolio I now have 50K in Free Cash Balances. And I have about 80K in the Pfizer portfolio also - as well as some other stock positions.
On 9/15/11 when I settle up on the fiscal year for my naked put portfolio, I will likely take the profits completely out of the account.
I have decided that the best thing I can do with that money is to make a lump-sum principal payment on my reverse mortgage. I'm currently paying a 2.77% variable rate per year on the borrowed funds and invariably the rate will be going up.
The rate being paid on the borrowed funds is higher than anything I can get from CD's and comparable to what an annuity would pay. Bonds are unatrractive as they are securities just like stocks and they will go down as interest rates rise.
The great thing about making a hefty principal payment on my reverse mortgage is that if I should later need or want the money for any reason, I can have it within 72 hours no questions asked - without needing to refinance or have the house reappraised, etc.
With a REVERSE mortgage as opposed to a traditional mortgage, anything you pay you can get back right away. Obviously that's not true in a regular mortgage these days as all kinds of seniors will eventually find out when they routinely apply to tap equity in their house only to find that they don't meet the INCOME requirements that all California lending institutions imposed in the wake of the LEH travesty
You are always wrong. PFE won't get "well over $25", as you "see", any more than it did over $35 in 2005, $32 in 2006, $31 in 2007 & 2008 or $29 in 2010.
A 20% pullback would drop PFE at least to $15 (more, given dividend deductions), & many of your other insane positions would also be in the money, deeply in some cases.
WHAT maniacal leverage? Would a 20% Dow drop put my GE 10-strike naked puts in the money? How about the F 10's? The BAC 7.50's? The T 20's? The PFE 15's? The ABT 35's? The CSCO or INTC 15's? Those are my eight open positions in the 100K deep-out-of-the-money naked put-writing portfolio. How many of those plays are going to kill me in a garden-variety bear market?
As for my Pfizer portfolio, it it the 160 of the 12.50-strike naked puts out to Jan. 2013 that will do me in? The 40 of the 15 strike naked puts out to Jan. 2013? Or maybe it's the 40 of the 17.50-strikes expiring Jan. 2012 that will put me in the poorhouse.
The only in-the-money naked puts that I have are 59 of the 25 strikes expiring Jan. 2012 and I will just keep rolling them out a year as necessary until the stock gets above $25. Every time I roll out, I of course put more OPM into the account. I see the stock getting well above $25 in 2012 and then I'll finally be out of them.
> If there's a crash, I pay off. No crash and I win - and win BIG. That's it in a nutshell.
You are like a person selling fraudulent hail insurance to farmers, unable to pay-off if it hails, but hoping it doesn't hail and you get to keep the farmers money.