No. of Recommendations: 3
Buying long dated puts would be very expensive. You'd lose a lot even if their prices don't rise. Unless you pick very low strikes, which would be a total loss unless the stock(s) REALLY tank, which is unlikely.
You can offset that a bit...you could buy higher strike puts and sell lower strike puts. In return for capping your profit (you presumably expect a 20-40% drop, not a 95% drop), you can reduce the cost of your position. There is no risk to writing that put, provided you remember to close it first or at the same time as the one you bought!
Repeated call writing might be the reverse, at or moderately above the current price(s). You make a decent ongoing income even if the stocks are flat. You lose lots of money if/as they rise, but considerably more slowly than if you're simply short the stock. If done repeatedly over a considerable period of time it might work. You'd lose money on the way up, but make money when the stocks flattened and when they fall, which might (?) make up for it and more.
Maybe a relative-to-market play? Long RSP and short QQQ? You're not betting on them falling, you're betting on them underperforming. This insulates you from the risk of everything melting up at the same time.
But in the end, there's probably a much better way to make money available to you--you'll probably think of something. No matter what investment vehicle you choose for this idea you have to be very sure of your expectation working out, and the profits if you're right might be pretty modest relative to the capital you commit.
Jim
