Nothing is going to happen to naked puts like the MSFT 12.50's expiring in Jan. 2013 no matter what kind of market panic there is. They are just too far out of the money and there's just too much earnings backing them up.
The one time in 100 they might need to be rolled, they will routinely be rolled after buying them back for no more than $60 or so per contract. There really is a limit as to how much people will pay for something like 12.50-strike options on stocks selling for $15.
I saw first-hand just yesterday how with CSCO down to $16.52 and nine months still remaining until Jan. 2012, the 15-strikes only 9% out of the money still were only going for $92 asked at the very high.
I have rolled options online during the absolute worst of panics a couple of years ago and I never had any problems at all. Nor were the spreads particularly wide. When there is panic, there is also LOTS of liquidity and these options trade with a spread of at most a few dollars anyway. How much of a problem is it to get an execution with a quote such as $61 bid, $64 asked? And that's all you ever really see on these large-cap, low-cost options with tons of liquidity.
The strategy with the deep-out-of-the-money naked puts is at the other end of the risk spectrum from what I was doing with the Pfizer portfolio and would appeal to the most-conservative of investors. Anyone who can take the risk buying say 15K of Microsoft stock is certainly suitable for selling 100 of the MSFT 12.50-strike naked puts which would require upfront cash of 16K or so. The risk with my play is LESS and the rewards are greater. Whether you want to admit it or not.
<<. I have in my hands the Holy Grail of most seniors - being able to earn returns in the teens very very safely with a high degree of probability>>.
That is reckless and irresponsible, as well as being plain out false. You obviously don't understand the risks and just keep repeating the same calculations that apply in benign times but not in a market panic. The last thing a senior wants to do during a market panic is scramble to roll options where there are no real bids and the vol is triple digits. You'll never listen to anybody, but stop trying to convince people to follow you,
You already did that with Maniacal Methods and anybody who wasn't willing or able to put a lot more money in got crushed as you were warned. You were supposed to write a book about Maniacal Methods. But it seems that you are trying to use the new naked puts as a way to have people forget Maniacal Methods without saying so or conceding that you no longer plan to write that definitive book.
Your m.o. is transparent.
No - I'm not a multi-millionaire. However, I am working on my second million.
Conditions have changed dramatically for the better in the options market since the crash and especially since 6/23/10. There are opportunities available now that I could only have dreamed about this time last year.
I'm one of the first and one of the few to fully grasp the significance of what my brokerage firm did with margin requirements on low-strike naked puts ten months ago.
This gives me the Keys to the Kingdom. I have in my hands the Holy Grail of most seniors - being able to earn returns in the teens very very safely with a high degree of probability.
Not an absolute guarantee but a very high degree of probability. Nobody else has the kind of reward/risk ratio that I do.
I may only bd a "guy on the internet" but I sure do know what I'm talking about and within just a few years, the Good Lord willing, it will be ME who writes the definititive book about options on this.
I have it made and now I want to teach others just what I know. Do you know how many seniors there are out there that would give their eye teeth to have the opportunity to earn the kind of returns I'm currently earning and as safely as I am?
Play me for a chump if you will but know that what I'm saying here is the absolute truth and in due course I'll be showing it to the best financiers, professors and stock brokerage executives there are. Rest assured that in making such presentations I'm not about to fall victim to silly errors in thinking or calculation.
There simply are no flaws here and the calculations of returns are as accurate as can be.
I may not know mechanics and computers or even how to plug a computer into a wall but when the subject is numbers and options, THE LIGHTS COME ON!
Here 'baby boy' (juvenile)
I will give you some attention:
If you knew how things worked in the market, given you've been around for a while, you'd be a multi-millionaire by now.
Not what you are.
Think that over.
Stocks with solid earnings will hold up much better than the market. During the height of the crash, PFE still traded no lower than about 5.7 times earnings.
So if the stock will earn $2.30 ion 2012, the absolute absolute low wouldn't be lower than $13 unless it truly was an end-of-the-world scenario. You're nuts if you think that Dow 5,000 would take Pfizer to $8. This kind of stock just doesn't sell for 3.5 times earnings and pay 11 or 12% dividend yields.