Question 1:
We all know that TQQQ is a triple leveraged ETF of QQQ. So if you buy one share of TQQQ, how many shares of QQQ are you essentially buying? In other words, if you buy x shares of TQQQ and y shares of QQQ, what should the ratio of x to y be in order to achieve the same profit/loss?
If your answer is 3, then you have made a mistake. Understanding the leverage ratio is crucial for leveraged ETFs.
Currently, the price of QQQ is 426 and TQQQ is 56. The ratio of their percentage changes is three times, which means if QQQ goes up by 1%, TQQQ goes up by 3%. The actual price change is QQQ up 4.26 and TQQQ up 1.68. Calculating that 4.26/1.68 = 2.5, it means you need to buy 2.5 shares of TQQQ to catch the same price increase as 1 share of QQQ.
Question 2:
What is the capital utilization rate?
From the above question, it can be seen that in the case of the same profit, the ratio of shares between qqq and tqqq is 1:2.5, requiring an investment of 426:140 = 3. So everyone should realize that the triple leverage is based on funds rather than shares. At this point, the results are very intuitive, next we will discuss the issue of options.
The current month's options call side atm price for qqq:tqqq = 9.2:3.4 = 2.7. The result we obtained in question 1 is 2.5, which is very close, indicating that the share leverage ratio also exists for options.
How to choose:
1....
We all know that TQQQ is a triple leveraged ETF of QQQ. So if you buy one share of TQQQ, how many shares of QQQ are you essentially buying? In other words, if you buy x shares of TQQQ and y shares of QQQ, what should the ratio of x to y be in order to achieve the same profit/loss?
If your answer is 3, then you have made a mistake. Understanding the leverage ratio is crucial for leveraged ETFs.
Currently, the price of QQQ is 426 and TQQQ is 56. The ratio of their percentage changes is three times, which means if QQQ goes up by 1%, TQQQ goes up by 3%. The actual price change is QQQ up 4.26 and TQQQ up 1.68. Calculating that 4.26/1.68 = 2.5, it means you need to buy 2.5 shares of TQQQ to catch the same price increase as 1 share of QQQ.
Question 2:
What is the capital utilization rate?
From the above question, it can be seen that in the case of the same profit, the ratio of shares between qqq and tqqq is 1:2.5, requiring an investment of 426:140 = 3. So everyone should realize that the triple leverage is based on funds rather than shares. At this point, the results are very intuitive, next we will discuss the issue of options.
The current month's options call side atm price for qqq:tqqq = 9.2:3.4 = 2.7. The result we obtained in question 1 is 2.5, which is very close, indicating that the share leverage ratio also exists for options.
How to choose:
1....
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Before we start the main text, let's be clear: in the market, apart from the most basic government bonds and money market funds, there are almost no risk-free arbitrage opportunities. Low yields do not necessarily correspond to low risk, but high yields definitely correspond to high risk.
I believe stock market investment is an impossible triangle: low risk, high return, short time. Only two of these three can exist at the same time. Even for investment geniuses with very high timing accuracy, they can only increase the probability of the third element appearing, but cannot completely deviate from this rule. For us retail investors, the simplest and most effective method is to exchange time for space, buy and hold, using more time, lower risk, and ultimately achieving high returns. Always remember:When you see tempting high returns, never hand over your capital without understanding the risks of the investment firsthand.
Returning to the main topic, I believe tsly and other YieldMax individual stock covered call etfs are not suitable for simple buy and hold strategies. It is almost impossible to rely solely on tsly for stable returns. $YIELDMAX TSLA OPTION INCOME STRATEGY ETF (TSLY.US)$ $Tesla (TSLA.US)$
The distribution rate of TSLY is above 50%. Despite being able to continue to collect premiums in volatile and bear markets, two things should be remembered:
1. The price of the collected premiums...
I believe stock market investment is an impossible triangle: low risk, high return, short time. Only two of these three can exist at the same time. Even for investment geniuses with very high timing accuracy, they can only increase the probability of the third element appearing, but cannot completely deviate from this rule. For us retail investors, the simplest and most effective method is to exchange time for space, buy and hold, using more time, lower risk, and ultimately achieving high returns. Always remember:When you see tempting high returns, never hand over your capital without understanding the risks of the investment firsthand.
Returning to the main topic, I believe tsly and other YieldMax individual stock covered call etfs are not suitable for simple buy and hold strategies. It is almost impossible to rely solely on tsly for stable returns. $YIELDMAX TSLA OPTION INCOME STRATEGY ETF (TSLY.US)$ $Tesla (TSLA.US)$
The distribution rate of TSLY is above 50%. Despite being able to continue to collect premiums in volatile and bear markets, two things should be remembered:
1. The price of the collected premiums...
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As we all know, most of this year's market gains have come from tech giants. However, the stock market doesn't just rise or fall. Especially in times of economic turmoil and increased uncertainty, stable returns and lower risk investments can increase long-term returns.
Moreover, to be honest, when every day is tiring, the dividend strategy should take up part of the position, at least seek peace of mind. In my opinion, there are roughly five types of dividend instruments that can be held for a long time:
1. Dividend individual stocks. This is divided into traditional stocks, such as PFE and KO; and growth stocks, such as MSFT.
2. Profit transfer stocks. BDC investment corporate bonds, MLP investment energy, royalty trust investment minerals, REITs investment real estate
3. Treasury bonds are divided into short-term debt and long-term debt
4. Monetary funds and savings
5. options strategy etf
Regarding dividend stocks:
A stable and continuous dividend payment history, and the dividend rate usually does not exceed 15%. Higher than this number means the company is in big trouble; if dividends are frequently skipped, or the amount of dividends often changes drastically, it is generally not a qualified dividend strategy stock
The company's financial health: The company's debt load, cash flow, and other financial metrics to ensure that it has sufficient funds to continue to pay dividends.
Sustainability of business models: For example, in the petroleum industry, if you think electric motors will completely replace internal combustion engines in the future, then the business of traditional energy companies may be greatly eroded
Growth potential: such as aapl $Apple (AAPL.US)$ MR and MSFT...
Moreover, to be honest, when every day is tiring, the dividend strategy should take up part of the position, at least seek peace of mind. In my opinion, there are roughly five types of dividend instruments that can be held for a long time:
1. Dividend individual stocks. This is divided into traditional stocks, such as PFE and KO; and growth stocks, such as MSFT.
2. Profit transfer stocks. BDC investment corporate bonds, MLP investment energy, royalty trust investment minerals, REITs investment real estate
3. Treasury bonds are divided into short-term debt and long-term debt
4. Monetary funds and savings
5. options strategy etf
Regarding dividend stocks:
A stable and continuous dividend payment history, and the dividend rate usually does not exceed 15%. Higher than this number means the company is in big trouble; if dividends are frequently skipped, or the amount of dividends often changes drastically, it is generally not a qualified dividend strategy stock
The company's financial health: The company's debt load, cash flow, and other financial metrics to ensure that it has sufficient funds to continue to pay dividends.
Sustainability of business models: For example, in the petroleum industry, if you think electric motors will completely replace internal combustion engines in the future, then the business of traditional energy companies may be greatly eroded
Growth potential: such as aapl $Apple (AAPL.US)$ MR and MSFT...
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My DIS holdings as of today's close $Disney (DIS.US)$ and UPST $Upstart (UPST.US)$ They are all in a state of loss, yet during this period of decline, buying low and selling Covered Call high has instead made my total position profitable, and AMZN $Amazon (AMZN.US)$ Covered calls have also increased my profit.
The exercise prices I chose were all able to enjoy some of the increase even if they were sold too far. The exercise dates were at the end of September/early October. On the one hand, I was worried that September might drop briefly; on the other hand, options that expire in one month reached a balance between time value and operating space.
I have been optimistic about these companies for a long time, but I don't mind selling them at any time; cash is waiting for an opportunity. In the current environment, having a bank or buying short-term treasury bonds has considerable benefits.
The exercise prices I chose were all able to enjoy some of the increase even if they were sold too far. The exercise dates were at the end of September/early October. On the one hand, I was worried that September might drop briefly; on the other hand, options that expire in one month reached a balance between time value and operating space.
I have been optimistic about these companies for a long time, but I don't mind selling them at any time; cash is waiting for an opportunity. In the current environment, having a bank or buying short-term treasury bonds has considerable benefits.
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$NVIDIA (NVDA.US)$ NVDA's recent trend has been fluctuating. Setting aside the significant ups and downs around the financial reports, just looking at these recent days, in a situation where the implied volatility remains stable, the price fluctuation from 470 to 495 is common, even though in comparison, the increase from 470 to 495 is only 5.3%, the price movement of an option can be as much as 100% to 300%.
However, when buying call options, we need to consider many issues:
1. Time Value. If you believe that NVDA will reach 500 within two weeks, so you purchase its 500 20230915 call option, but if you guessed wrong, even if NVDA trades sideways at 495, this option will lose an average of $85 every day, eventually becoming worthless. And if it finally reaches above 500, the profit you make will still be affected by the time value reduction.
2. Amplifying Volatility. Taking today's trend as an example, NVDA's chart roughly forms a downward-facing parabola, 484-499-492. If you buy a large amount of call options at 495 and wait to sell at 500 instead of setting a stop loss, your loss will be today's time value added to a several times larger drop, wake up tomorrow to see each option losing 20%-30%.
3. The risk-reward ratio is not good. You might say that buying options has limited maximum loss and unlimited maximum profit. However, in reality, when selling options encounters a significant loss is not very common, while experiencing significant losses with buying options is quite common.
However, when buying call options, we need to consider many issues:
1. Time Value. If you believe that NVDA will reach 500 within two weeks, so you purchase its 500 20230915 call option, but if you guessed wrong, even if NVDA trades sideways at 495, this option will lose an average of $85 every day, eventually becoming worthless. And if it finally reaches above 500, the profit you make will still be affected by the time value reduction.
2. Amplifying Volatility. Taking today's trend as an example, NVDA's chart roughly forms a downward-facing parabola, 484-499-492. If you buy a large amount of call options at 495 and wait to sell at 500 instead of setting a stop loss, your loss will be today's time value added to a several times larger drop, wake up tomorrow to see each option losing 20%-30%.
3. The risk-reward ratio is not good. You might say that buying options has limited maximum loss and unlimited maximum profit. However, in reality, when selling options encounters a significant loss is not very common, while experiencing significant losses with buying options is quite common.
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Friends who haven't seen it can take a look at my previous post.The strong hedge remains, wait and see Nvidia's earnings report.I mentioned not to gamble on earnings using options, even if gambling, it's best to short the volatility. Because even if I'm overall bullish on Nvidia, buying calls when iv far exceeds hv, the probability of loss is high.
Today Nvidia. $NVIDIA (NVDA.US)$ The market opened with a sharp decline, dropping from 502 all the way to 475 before briefly rebounding to 471 at the close, exactly the same as yesterday's closing price. On the options chain, the opening price for the 500 call expiring this week was 12.45, but in reality, this price could not be filled, with most people's fill price around 7. Its closing price yesterday was 11.63, meaning that even if the direction was correct, half of the investment would be lost. If one continues to resist and hold on, the outcome is predictable - this call option is now close to zero. Interested friends can check the price changes of ATM puts and calls themselves. Almost all the options that were bought at yesterday's close expiring this week ended up with losses of over 50% by today's close.
The happiest people today are probably the market makers, followed closely by the friends who saw my post last time and stayed out of the market together during the earnings report. In today's market environment, not losing is winning.
Other technology stocks also fell today, with vix not significantly higher. My judgment is that today's decline is preparing for tomorrow's volatility, waiting to see if market sentiment shifts...
Today Nvidia. $NVIDIA (NVDA.US)$ The market opened with a sharp decline, dropping from 502 all the way to 475 before briefly rebounding to 471 at the close, exactly the same as yesterday's closing price. On the options chain, the opening price for the 500 call expiring this week was 12.45, but in reality, this price could not be filled, with most people's fill price around 7. Its closing price yesterday was 11.63, meaning that even if the direction was correct, half of the investment would be lost. If one continues to resist and hold on, the outcome is predictable - this call option is now close to zero. Interested friends can check the price changes of ATM puts and calls themselves. Almost all the options that were bought at yesterday's close expiring this week ended up with losses of over 50% by today's close.
The happiest people today are probably the market makers, followed closely by the friends who saw my post last time and stayed out of the market together during the earnings report. In today's market environment, not losing is winning.
Other technology stocks also fell today, with vix not significantly higher. My judgment is that today's decline is preparing for tomorrow's volatility, waiting to see if market sentiment shifts...
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Last week opened a bull spread put on QQQ. $Invesco QQQ Trust (QQQ.US)$ And SPY. $SPDR S&P 500 ETF (SPY.US)$ After the rise in the large cap and technology stocks today, there was a slight loss, but I do not plan to stop the loss. I believe that the risk of the large cap still exists in the medium term.
The technology stocks AMZN in hand. $Amazon (AMZN.US)$ And UPST. $Upstart (UPST.US)$ Continue to sell covered calls for protection/preparing to sell stocks, with AMZN strike price at 129, expiring at the end of next month. If it falls to around 132, I will consider selling more stocks downward, if I cannot sell them, I will keep moving the position as it drops more. The current position is relatively small, and AMZN's fundamentals are also not a big issue, so I am completely calm in the long run.
There may be a rate cut from the end of this year to the beginning of next year. By that time, the potential price increase for TLT. $iShares 20+ Year Treasury Bond ETF (TLT.US)$ will be significant. So, do not focus on the short-term trends of TLT. This thing has a high opportunity cost, only profitable if held for the long term, and the black swan hedging effect it brings can be seen as a bonus. A 10%-20% TLT position is sufficient.
Nvidia rose today...
The technology stocks AMZN in hand. $Amazon (AMZN.US)$ And UPST. $Upstart (UPST.US)$ Continue to sell covered calls for protection/preparing to sell stocks, with AMZN strike price at 129, expiring at the end of next month. If it falls to around 132, I will consider selling more stocks downward, if I cannot sell them, I will keep moving the position as it drops more. The current position is relatively small, and AMZN's fundamentals are also not a big issue, so I am completely calm in the long run.
There may be a rate cut from the end of this year to the beginning of next year. By that time, the potential price increase for TLT. $iShares 20+ Year Treasury Bond ETF (TLT.US)$ will be significant. So, do not focus on the short-term trends of TLT. This thing has a high opportunity cost, only profitable if held for the long term, and the black swan hedging effect it brings can be seen as a bonus. A 10%-20% TLT position is sufficient.
Nvidia rose today...
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Opened spy position yesterday $SPDR S&P 500 ETF (SPY.US)$ And qqq $Invesco QQQ Trust (QQQ.US)$ spread bull put on, expiring on September 29, with respective near-term strike prices of 432 and 350.
Below is my trading plan:
If two weeks pass without reaching the strike price, and if the large cap market remains flat, then I will roll over to the end of October. If technology stocks and large caps rise, I may have to cut my losses and stop out, as the time cost involved in such trades may be unacceptable to me.
If the strike price is reached at any time within the next two weeks, I will immediately close the position, without considering taking the short side. Given that index options are involved, unless a black swan event occurs, expecting a continuous downward trend is not realistic, and there is a high risk of adding to losing positions.
Because I have been selling covered calls, buying low and selling high to reduce costs, Amzn $Amazon (AMZN.US)$ Both DIS and are preparing to buy out-of-the-money call options. If it doesn't work out, then these index put options will start to come into play, and in the end, they might even make a profit. $Disney (DIS.US)$ The downside this week has not caused me any losses, all the profits have already been secured, and the unrealized losses seem insignificant.
upst $Upstart (UPST.US)$ The cc has unrealized losses, but if the stock price remains around 33 next week, you can capture a significant amount of time value.
Below is my trading plan:
If two weeks pass without reaching the strike price, and if the large cap market remains flat, then I will roll over to the end of October. If technology stocks and large caps rise, I may have to cut my losses and stop out, as the time cost involved in such trades may be unacceptable to me.
If the strike price is reached at any time within the next two weeks, I will immediately close the position, without considering taking the short side. Given that index options are involved, unless a black swan event occurs, expecting a continuous downward trend is not realistic, and there is a high risk of adding to losing positions.
Because I have been selling covered calls, buying low and selling high to reduce costs, Amzn $Amazon (AMZN.US)$ Both DIS and are preparing to buy out-of-the-money call options. If it doesn't work out, then these index put options will start to come into play, and in the end, they might even make a profit. $Disney (DIS.US)$ The downside this week has not caused me any losses, all the profits have already been secured, and the unrealized losses seem insignificant.
upst $Upstart (UPST.US)$ The cc has unrealized losses, but if the stock price remains around 33 next week, you can capture a significant amount of time value.
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Got it $Invesco QQQ Trust (QQQ.US)$ with $SPDR S&P 500 ETF (SPY.US)$ Put in the long-term price and prepare to hold it close to an ATM.
In addition to the stocks in hand $Pfizer (PFE.US)$ and DIS $Disney (DIS.US)$ They are all ready to buy fictitious value and run away. If you don't succeed, then these index puts will start to work, and in the end, you may even be able to make a profit.
Get ready to buy Tesla in high school $Tesla (TSLA.US)$ Put, this wave saw 200-210
In addition to the stocks in hand $Pfizer (PFE.US)$ and DIS $Disney (DIS.US)$ They are all ready to buy fictitious value and run away. If you don't succeed, then these index puts will start to work, and in the end, you may even be able to make a profit.
Get ready to buy Tesla in high school $Tesla (TSLA.US)$ Put, this wave saw 200-210
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After today's closing, most of the stocks in the portfolio quietly dropped a lot, but currently not too worried. $Amazon (AMZN.US)$ $Upstart (UPST.US)$ $Disney (DIS.US)$ These are the three stocks that have been performing relatively comfortably recently. It is currently in a sideways-down-sideways trend, selling high and buying low has reduced costs significantly. This trend is very suitable for this strategy, with a win rate of over 95% in the last two days for the strategy. I am also prepared to sell off upst. I don't expect upst and dis to fall much in the short term, upst might even go up to 35-36, so I haven't bought puts to hedge the downside risk. However, I bought a 133 put on amzn, and based on the current trend, there is a possibility of exercise. But I may close the position early and sell the stocks to free up cash.
Sold a put expiring next month on the 8th with a strike price of 92. $iShares 20+ Year Treasury Bond ETF (TLT.US)$ US government has been engaging in various tricky operations recently, this year there seems to be no intention of interest rate cuts, not sure if there will actually be a debt default. But since choosing to invest in US stocks, it is actually based on being bullish on the long-term prospects of the USA. If tlt really falls below 90, then it will be a long-term hold, systematically selling weekly straddles to earn interest.
However, I am considering buying Black Swan for hedging. India across the ocean is currently experiencing many things...
Sold a put expiring next month on the 8th with a strike price of 92. $iShares 20+ Year Treasury Bond ETF (TLT.US)$ US government has been engaging in various tricky operations recently, this year there seems to be no intention of interest rate cuts, not sure if there will actually be a debt default. But since choosing to invest in US stocks, it is actually based on being bullish on the long-term prospects of the USA. If tlt really falls below 90, then it will be a long-term hold, systematically selling weekly straddles to earn interest.
However, I am considering buying Black Swan for hedging. India across the ocean is currently experiencing many things...
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