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HI Peter,
I think Leo Zamansky is a pretty straight shooter. I don;t think you
can go too far wrong from his stuff. -Ralph Vince
---Peter Ryan <pryan@xxxxxxxxxxxxxx> wrote:
>
> I have just received Rina system software on trial for a few weeks.
>
> I got 3D smartview and money manager.
>
> Does anyone here have any expressible opinion - public or private.
>
> Thanks
> Peter Ryan
> pryan@xxxxxxxxxxxxxx
>
>
> -----Original Message-----
> From: Lamont Cranston [SMTP:mulligan@xxxxxxxx]
> Sent: Saturday, June 20, 1998 3:27 PM
> To: Mark Johnson
> Cc: omega-list@xxxxxxxxxx
> Subject: Re: Jon Schiller's book "The 100% Return Options Strategy"
>
> Mark Johnson wrote:
> >
> > Has anyone else read this book? I got my copy from Windsor
> > Books, for about $55. I would like to exchange opinions
> > with other purchasers/readers by email.
> >
> > The book advocates two strategies using stock index
> > options, either the OEX (CBOT) or the SIS (LIFFE).
> >
> > One of the options strategies is intermediate-term
> > (approx 30 day trade duration) and the other is short-term
> > (approx 2 hour trade duration).
> >
> > His intermediate-term strategy boils down to this: index
> > options are chronically overpriced, particularly far-out-of-
> > the-money options. So you should sell options and collect
> > the inflated premiums and you'll do great. Schiller
> > establishes option spreads (e.g. sell a call, buy a call
> > further out) for a net credit ("credit spreads" in Ken
> > Trester books).
> >
> > Schiller abandons the standard options pricing models
> > (Black-Scholes, Cox-Rubenstein-Ross, et al), and instead
> > presents his very own formulae for options probabilities.
> > Using his own equations, Schiller finds that if you sell
> > credit spreads with about 4 weeks till expiration, far enough
> > out-of-the-money that the net credit is one, then that spread
> > will typically have about a 95 percent chance of expiring
> > worthless, and you will get to keep the entire premium (1).
> > An example:
> >
> > It is 9:20AM PDT on Thursday June 18, 1998.
> > The cash OEX index is presently 536.40
> >
> > July 98 calls @ strike=560 are trading at 3
> > July 98 calls @ strike=565 are trading at 1 7/8
> >
> > Schiller would have you sell the July 560 calls and
> > buy the July 565 calls. The net premium is 1 1/8
> > credit, which goes into your account. This spread
> > expires on July 17th. If the OEX is at or below 560
> > on that date, you get to keep the entire 1 1/8
> > premium received.
> >
> > Schiller's probability model says that there is
> > a 95% probability that the OEX will be at or below
> > 560 on July 17th, so there's a 95% probability that
> > you get to keep the entire 1 1/8 credit.
> >
> > Just to horse around with arithmetic, let's do a VERY CRUDE
> > calculation of expectation on this position.
> >
> > 95% of the time, you win 1 1/8
> > 5% of the time, you lose 3 7/8 (since the spread is 5 wide)
> >
> > So your expected profit is: (0.95 * 1.125) + (0.05 * -3.875)
> > which is +0.875 ... 7/8ths. Neglecting commissions etc.
> >
> > Your risk on this trade is 3 7/8 ($387.50) per contract.
> > Your expected profit is 7/8 ($87.50) per contract.
> >
> > If you trade one contract for every $775 in your account,
> > as Schiller suggests, (he says don't put up more than 50%
> > of your capital for margin on any one trade), then on the
> > average you will make $87.50 profit for every $775 in the
> > account. That's a profit of 11.29 percent, in one month.
> >
> > And you get to make this trade twelve times a year (once per
> > expiration month). So your expected annual growth rate is
> > 261% per year.
> >
> > Schiller deducts commissions (he assumes $7.50 per contract)
> > and he estimates the impact of the bid-ask spread, and he
> > assumes you'll get a net credit of 1 rather than 1 1/8 as
> > shown in this example. That's how he arrives at a figure of
> > "only" 100% per year.
> >
> > That's his intermediate-term strategy. His short-term
> > strategy, and his profitibility estimates for it,
> > are REALLY surprising.
> >
> > So, has anyone else read the book? Wanna exchange
> > opinions? email me please.
> >
> > -Mark Johnson
> > janitor@xxxxxxxxxxxx
>
>
> This is exactly what a friend of mine is doing and he averages about
> $18000 per month. He very conservative, so with a little bit more
> aggression he could really score.
>
> Lamont Cranston
> "who knows what evil lurks"
>
>
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