Returns/StJ - As long as we can add 10% to S&P returns trading options, all shall be well. As I pointed out in the last crisis, you can just buy SPY ($213) and sell the Dec 2018 (828 days) $210 calls for $20 and the $185 puts for $16 and that's net $177/193.50 so + $33 (18.6%) if called away at $210 but, of course, then you roll with your $177 basis.
So let's say you have $1M and you put 25% into SPY with 1,500 for $265,000. You risk owning 3,000 at $580,500 and over 2,100 on SPX gives you $49,500 + $1 quarterly dividends x 9 is another $13,500 so, even if you don't roll you're up $63,000 (23.7%) which is a lock on 10% a year in our first round.
As long as the S&P doesn't go 3 straight times (7 years) down more than 5%, you'll beat the S&P performance by 10% when flat or down and lock at least 10% when up but it's not just 10% because in round 2 you have $265,000 + $63,000 and round 3 is $328,000 and then $391,000 and $454,000 by year 10 and even if your other $750,000 does nothing, you still have about $1.25M after 10 years risking just 1/4 of your money on SPY. If you risked all of it - then you'd be up 100%, for a 10% a year average, barring a real black swan event that hasn't ever hit a full decade.
That's why I can never understand large hedge fund managers who can't beat the S&P over time - you have to make consistently really bad choices...
That reminds me of MON. Bayer is offering $66Bn in cash, which is $128/share and yes, maybe regulatory gets in the way but I think it gets done in the end and Mon 2019 $100 puts can be sold for $11 so let's sell 5 in the LTP for $5,500 as it wouldn't be so terrible to own 500 shares at net $89, even if things don't work out.
