Three Methods to take advantage of Portfolio Margin for Insane Gains
Karen the Supertrader turned $100k into $41 million during the 2007-2011 stock market while overall market declined quite a bit. How did she do it? She traded very safe options (deep out of the money) using portfolio margin. Each bet had 95% chance of winning. She used math in her favor by placing high probability bets but making a very small amount with each bet. She was able to use 50% of her capital for options trading. Why can’t regular investors do what she did? In a cash only account, to make $500 you sell a put on SPY with 95% win probability. Not bad, right? You make that $500 fee regardless plus if you lose the bet you would simply buy 100 shares of SPY at a price you like anyway. HOWEVER you’ll need to lock up $45000 in case the trade doesn’t go in your favor and you are forced to buy the shares. It would be locked up for 2 months. Depending on how much money you have, you wouldn’t be able to do too much of this. The returns, while reliable, are not better ...