If you listen to Buffett, you don't want to diversify because it means you don't trust yourself
That's not true, you don't want to overdiversify if you listen to him. He's definitely not saying you should all in on one stock.
really hope we can move past this moonroof discussion if this is what we're doing...
really hope we can move past this moonroof discussion if this is what we're doing...
I guess if Moonroof wants the risk profile he wants, that's his personal preference. I hope he never has the misfortune of going all in on a Lehman Brothers or Enron or Luckin Coffee the day before the fraud announcement. Or at least if it happens, that he feels okay after losing millions of dollars (I do expect his portfolio to be in the millions before he hits that super unlucky event) in one blow.
I mean the fastest way to double your money is a roulette table
Although potentially fast, that's way less likely to actually accomplish the doubling though. At a roulette table, your probability of doubling your money is going to be below 50% no matter what strategy you use. Moonroof's strategy is very likely to double his money on a timescale of a small number of years. It's positive EV.
It's actually not likely to double his money all that soon with his current taste for risk.
$330k puts into Disney here we go. $167.50 strike next Friday, got around $1200 for it.
330000/1200 = 275.
He'd double his money in around 4-5 years if never assigned. In the grand scheme of things it's not that long, but consider the price only has to drop by about 5% for him in any given week to actually be assigned the shares which would further limit his profit potential.
Then you consider the possibility of a medium sized gap down on DIS in that time in a given week potentially costing him a ton of money (if it drops even just 15%, he'd be assigned a bunch of $167.50 shares when the stock is around $150, then likely panic sell at $150 or panic buy back the puts and eat a huge loss limiting him further still)
I do honestly believe SPY or QQQ and forget it would give overall more money.
About twice a year he goes all in on some risky stock (AMC, DISCB). Those plays are generating the majority of his returns, not the put selling.
Those plays are actually not that much more safe than the roulette table though. Just because he hit black twice in a row doesn't make it smart.
You just can't change the fact that it's negative EV. For instance, you can completely eliminate risk at roulette by betting an equal amount on every single number, including the zeroes. Then you will have a guaranteed loss of a fixed amount each spin. Of course you probably aren't interested in a small guaranteed loss every spin, but you could have that if you wanted.
I actually like that Lopen, selling at a higher strike but putting in less money and then using the remaining money elsewhere.
That is literally all we've been saying the whole time about diversifying.
Even if you are doing do set far-from-strike prices you're better served by doing it in 4 places rather than just the 1.
I have to say, the last week the market has been pretty red.
You could be right. Annoyed I sold mine but relented to not be looking at it every second.
