Thanks, after I wrote this I walked my dog and was mulling it over a bit more. I remembered this post, using a strategy even my options-naive brain can understand. Of course the underlying stocks make a huge difference, slow and steady growth stocks should generate far lower premia (and losses) than highly volatile ones, so maybe the difference in yields achieved by our colleague could be fully explained by that (I didn’t look at what stocks they’re applying the strategy to, just hypothesizing).
The next thought was that to get these yields that the yieldmax funds are getting there has to be either big risk, or even bigger opportunity cost (Microstrategy is +272% YTD, the fund’s yield is claimed to be 190%, and YTD appreciation is ~6.6% so there’s a 75% opportunity cost right there). One can argue, I’d fall into that camp myself, that selling can be stressful, so consciously settling for lower returns not requiring selling is a viable and respectable approach.
I’d surely hope there is regulatory oversight and it’s not a Ponzi, but indeed as referenced in this thread Madoff fooled many rich and powerful so what chance do small time impressionable get-rich-quick chasers have to survive?
This sounds like a good idea - though I can’t stand the “robinhood” name - but it’d need to be caveated by several walls of text and big red letter warnings about getting ones account blown up, and being in the wrong side of a debt collection agency. Of course people will promptly click “Agree” and ignore because 0ptionDud3 told them how they’ll become millionaires in three clicks on TikTok.
It’s where you draw the line, though, isn’t it? These strategies appear fairly safe but I haven’t spent serious time to understand them, or even dreamt of trying to apply them in practice. Any sort of naked option shouldn’t be allowed, and the cash requirements for puts should also be very strict, in my opinion, to prevent people from being on Jimmy Burke’s hit list.
Edit: personally I’m both chicken and simple, I’d use cash-secured puts to get things I want, that’s all 