Thanks for the thoughtful reply. I actually agree with your fundamental analysis. I think the concern with this type of strategy is that markets are not always rational. I'm reminded of funds like Long Term Capital Management that were able to leverage small profits into impressive annual returns... until prices fell beyond margin-safe levels. I hope you have considered whether these are risks you need to be taking. In any case, it makes for interesting reading. Good luck.
I calculate the notional value of your options positions at $839K (strike price x number of contracts x $100) on a mere $110K equity. What do you do if the market falls 20-30%? This portfolio seems destined to be wiped out in time.
Eureka, I followed your trades with some interest several years ago and notice that you've bounced back from the losses. Congrats!
I'm wondering if you have written a summary anywhere of your losses and recovery, peak to trough, what collateral you had pledged in March 2009 to stay afloat, and whether you were forced to reduce your positions position. I see that your are again trading a highly leveraged position, and am curious if you have modified your strategy/behavior in light of the 2008-9 experience.