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PaperclipPerfector  5d ago (text post)   2393 thread views

Friday Fun Thread for May 1, 2026

Be advised: this thread is not for serious in-depth discussion of weighty topics (we have a link for that), this thread is not for anything Culture War related. This thread is for Fun. You got jokes? Share 'em. You got silly questions? Ask 'em.

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Ask yourself: if you had the cash you needed to actually buy 100 shares of something you thought was a good hold, would all this worry about exposure to the downside suddenly disappear?

If so, then it’s not the downside risk that you’re worried about; you’ve been through market volatility without panic selling. You’re worried about your cash position. Cash can be managed! Positions can also be managed to minimize chances of assignment. There’s recourse. Worst case, you wake up with 100 shares of some piece of crap and you owe your broker thousands of dollars. You can simply sell the shares to pay back the broker, and you may have to eat whatever loss makes up the shortfall. You just make sure you can handle that loss. And at the end of the month you pay the $4 in tax-deductible margin interest.

So why not use the money you set aside for the risk on even more call options instead? Does selling puts really make your bet more +EV?

Because the money is already in things like shares of VTI, SLV, and SGOV. Right now less than 3% of my total account value is in cash, despite my enormous notional exposure. I’m trying to fix that without having to sell any shares but it’s slow-going. For example I got assigned 100 shares of TSCO recently and that set me back on the goal.

Also, buying options is generally negative EV (you’re literally paying what’s called a premium) unless you are exceptional at picking direction and can predict strong moves. Brokers like Robinhood try to be clear about that when they tell you what your break-even share price will be when buying a call. I don’t consider myself good enough to speculate, so I’d rather rely on my appetite for risk and willingness to warehouse that risk for whomever is buying this stuff.

Hmm. :I

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