I predict that the S&P 500 will be well under 5,000 by September 30th

[cawacko]

Every time an option pays off, my strategy would have worked. It becomes a question of time. If you start the strategy too much before the payoff, you will lose money.

Let me give you a simple example, one day the S&P 500 will drop by 20%. That is not an if, but a when. It will happen, sooner or later. If I buy SPY(an S&P etf) puts 5 weeks off at $645 every week for $5, then when it drops by 20%, I will have made more than $176 per share, so for five weeks $545. That means that as long as it happens in less than 109 weeks, I have made money.

That is an oversimplification, but it explains the basic idea. It is one of the simpler strategies for investing in options. Given that exact dates of moves are tough to estimate, it is a popular strategy.

The oversimplifications are that options contracts are for a 100 stocks, and I am buying more than one of them. The stock movement does not need to be exactly 20%, can be greater or lessor. If you are willing to sell and buy a little on the ups and downs, and there is some market volatility, you can make some money while you wait for the big payout.

You’re describing a hypothetical. I’m asking about reality. What are the actual results from the trades you already made? You still have not listed the performance. If the strategy works, the numbers should be easy to show.

 

[Walt]

You’re describing a hypothetical.

I am describing what almost every professional trader of options does. It is not a hypothetical, it is one of the primary strategies.

What are the actual results from the trades you already made?

I am up a bit. A lot of buying at $4.50 and selling at $7.50. I have some SPY 11/14/2025 $645 Puts that look like they may expire out of the money, which would put me back to zero. They are at $2.74, and I bought them at an average of $4.68. They have three weeks to come back in value, but I will not cry if they do not.

The point is not to make drips and drabs of money, but to be in the market when the big move happens. I am not turning down the drips and drabs, but that is not the thing I am looking for.

If the strategy works, the numbers should be easy to show.

The working part of the strategy is in the future. If in the next 15 months there is a 10+% drop in the S&P 500, the strategy worked. Again, the point is not to make money all the time, but to be in the market when the big money is made.

 

[Freddy Figbottom]

Correct.


... or one might decide to actually invest the money rather than engage in trading.


Yes.


Yes. Learn the difference between systematic-risk and non-systematic risk.

that would mean building or creating.

parasitic soulless morons don't understand that.

 

[cawacko]

I am describing what almost every professional trader of options does. It is not a hypothetical, it is one of the primary strategies.


I am up a bit. A lot of buying at $4.50 and selling at $7.50. I have some SPY 11/14/2025 $645 Puts that look like they may expire out of the money, which would put me back to zero. They are at $2.74, and I bought them at an average of $4.68. They have three weeks to come back in value, but I will not cry if they do not.

The point is not to make drips and drabs of money, but to be in the market when the big move happens. I am not turning down the drips and drabs, but that is not the thing I am looking for.


The working part of the strategy is in the future. If in the next 15 months there is a 10+% drop in the S&P 500, the strategy worked. Again, the point is not to make money all the time, but to be in the market when the big money is made.

You still haven’t shown a net track record. Being “up a bit” for the moment doesn’t prove anything, especially when you also admit one expiration takes you right back to zero. A strategy that only works if a crash bails it out is not a strategy. It is waiting and hoping.

 

[Walt]

A strategy that only works if a crash bails it out is not a strategy.

A strategy that only works if there is a drop in the market is a valid strategy.

 

[cawacko]

A strategy that only works if there is a drop in the market is a valid strategy.

You just confirmed there is no current track record and the strategy only works if the market crashes. That was my entire point. Thank you for acknowledging it.

 

[Walt]

You just confirmed there is no current track record and the strategy only works if the market crashes.

The word crash is a little vague. A 10+% drop in a 15 month rises would be what I would need to make money. Is a 10% drop a crash or a correction?

The basic strategy has worked. Derivatives traders have paid money for months to be in the market for the big win. Sometimes it works out, and sometimes it does not, but it is a valid strategy that has worked in the past. In fact, it is working right now in some part of the market.

Ever seen the Big Short, or read the book? Michael Burry was paying into Credit Default Swaps for two years before his big payday. I would argue he started too early, and could have made a much better return had he started later. Having said that, he did make a good return off a strategy that you claim never works.

 

[cawacko]

The word crash is a little vague. A 10+% drop in a 15 month rises would be what I would need to make money. Is a 10% drop a crash or a correction?

The basic strategy has worked. Derivatives traders have paid money for months to be in the market for the big win. Sometimes it works out, and sometimes it does not, but it is a valid strategy that has worked in the past. In fact, it is working right now in some part of the market.

Ever seen the Big Short, or read the book? Michael Burry was paying into Credit Default Swaps for two years before his big payday. I would argue he started too early, and could have made a much better return had he started later. Having said that, he did make a good return off a strategy that you claim never works.

You still haven’t shown a verifiable track record, and that was the entire issue. If the future proves you right, great. Until then, I’ll stick with strategies that can be measured in the present.

 

[Walt]

You still haven’t shown a verifiable track record, and that was the entire issue

OK, Michael Burry has a verified track record. He paid into a derivatives investment for two years, and then made a big win in the end.

I am not saying it will absolutely work, but it does work a reasonable amount of the time, and I think it will work for me. I believe the odds are in my favor.

Until then, I’ll stick with strategies that can be measured in the present.

Future returns cannot be measured in the present.

 

[gfm7175]

Dow tumbles nearly 900 points after Trump reignites trade war between the world’s two largest economies​

https://www.cnn.com/2025/10/10/investing/us-stock-market

.... andddddddd now DOW is back up near its record high. So?

 

[IBDaMann]

The market is overpriced, and trump is doing damage to the market.

You don't have to be so specific.

There is a big correction coming in the next 15 months.

How big is "big", Nostradamus?

I am even more heavily invested in the market than taking short positions.

Doesn't that make you stupid? Only someone who is addicted to gambling would go all in on a gamble he believes he is going to lose.

I may lose money in the correction, but over decades I will make money.

Why don't you buy AFTER the correction? ... unless you don't actually believe any correction is forthcoming ...