No. of Recommendations: 8
It's always the fees... and the "we keep the best vig for ourselves"... with these "products".
These all seem to be trying to get something for nothing. You do better in some circumstances, but worse in others, so they don't accomplish the magic.
But I can't help but wonder if there is a relatively sensible way to do a "structured" portfolio. Imagine an asset for which you have some reasonable estimate of actual value. You maintain 50% of your portfolio in that asset, 50% in cash. You continually write put options for a notional value of 50% of the portfolio value at fair value minus 15-25%, and you write call options for a notional value of 50% of the value of the portfolio at 15-25% above the estimated fair value. Once in a while some options will get exercised, but you have the stock to let the puts happen, and the cash to let the calls happen. Periodically (but not too rapidly), you refresh and rebalance to the target positions and weights by buying or selling stock, and writing more options.
This wouldn't be a very high return, since you're only half in equities at any given time, plus a little interest and a little option premium income. But at least it would be relatively sane, and relatively steady. It's buy and hold with a strangle...a strangle hold?
Jim
