i am not interested in crazy gains or 100x plays, just wondering if anyone here uses leverage in a more conservative way.
like instead of going all in, just slightly increasing exposure to boost returns over time.
is that actually sustainable or does it always end up going wrong eventually?
Anyone using leverage just to slightly boost returns over time?
byu/Successful_Tailor113 inoptions
Posted by Successful_Tailor113
5 Comments
Options are, by definition, “leverage” as compared to trading the underlying, so clarification on what you mean by the term might be helpful.
Literally describing LEAPS
The old research I remember is that a small amount of leverage, 20 percent is the sweet spot for long term investors in the savings phase. It usually applies to those with stable careers and a high savings rate.
So to clear, a person with $100k has the equivalent of $120k invested. More than that tends to make drastic drawdowns near inevitable.
One milestone is when the account exceeds ten years of savings. So if the account was wiped out it might take ten years of savings to replace it. At that point less leverage seems prudent.
Captain Obvious will add that each person has their own risk tolerance and investment goals. About half here are near pure gamblers. Nothing anyone says is likely to change that.
Yes I would say every person in the options sub is using leverage.
And yes, leverage is a spectrum. There’s a whole range of leverage options can use and it goes from pretty safe to wildly unsafe.
You are gonna need to be more specific about what you are thinking
Yeah I do. Although if rates would go up by a lot then i would probabky delever.
Over time the expected net return should be higher at current borrowing costs.
I prefer to simply write my options on margin so that i can get a return without actually paying interest rates untill i get assigned.