Advanced Micro Devices Inc (AMD)

[HailMary]

requires you to be "smarter" than the market

I don't agree with you here. You don't have to be smarter in terms of what a stock will do, but you do have to be smart about the strategy and risks. Writing puts is perfect for someone with a nest egg they want to preserve. If you stick to a few simple rules, you can easily make over 10% a year. The keys are

1. write puts on a few different stocks you can follow closely that you would not mind owning
2. write puts that are well out of the money (below the current price of the stock)
3. write puts monthly that expire the next month
4. set a loss limit - I usually set this around 100% of the proceeds. For instance if I write a put for $.75 and it goes to $1.50, I'll buy it back, and reevaluate the underlying stock the next month for more put writing.

It takes some experience and willpower to do this, so I can't say it is for everyone. I find you can safely make around 2.5% of the money risked per month, and about 3 out the 12 months you'll have to buy back for a loss 100% (rule 4 above) or be assigned the shares. This works out to (2.5*12)-(3*2.5*2) = 15% per year. Some years are better (no buy backs are necessary), some are worse (more buy backs). Overall it is a more steady return than just buying stocks. I don't strictly follow the rules above, because often times I want to be assigned the stock for a long term hold, and obviously I'm risking some of the proceeds on speculation.

I'm also not big on covered calls. Often when it is time to sell, it is really time to sell for a reason. You don't want to chase a stock downwards trying to sell it. In your example the option writers should have allowed the shares to be called away, or at the very least set a loss limit like I suggested above. They would have still made money on their shares. There will always be opportunities to buy shares again.

This isn't arrogance. You can do better than average if you have the time and the will. Most people don't want to bother with the complexity, so they're happy with a lower return. I'm not one of those. I like to be involved in the process, and I get a better return for doing so.

HailMary