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“Guys chris crepe on here to talk about the the split strike conversion method of of investing and this method was made famous by a rather infamous now i would by bernie madoff. There is nothing wrong with this method in terms of legality or anything like that it s just that he used it so people started to just hear the split strike conversion. You know does a term and they said well i don t want that i don t want my money invested that way is it being invested that way please make sure my money isn t being invested using this using this strategy. What you do though it s actually to me.
It s pretty it s pretty brilliant all right you i m gonna just break it down in a few steps. So that i don t have to keep rambling on and on so. Here are basically the steps right here. I got this on investopedia.
Okay. Number. One you buy shares of companies to create a portfolio that represents a major index like the s p 500. Now madoff himself supposedly at least back when he did real trading use the s p 100.
Anyway you buy 25 or 30 of the star of the you know firms that move. Very closely with the overall index preferably with high dividend payouts. Now what that s called when when when a stock moves..
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Very closely with the overall index that s having a beta of the usually one a value of one so i used fin viscom a stock free stock screener. I manually actually typed up this morning. All of the s p 100 stocks into the screener because they didn t they only offer the s p. 500.
And the dow jones anyway and i you know the dow 30. And i came up with these basically the beta that s closest to 1 and above are gonna be moving the closest with the market. So i m ignoring this one because it s an irish stock in fact. I m not sure than why it s on the s p.
100. I must have done a typo excuse. Me a typo. But if you use if you buy at least shares in these ups general electric microsoft cvs ford danaher corporation alphabet inc goog l halliburton slb u tx wells fargo and then basically we make the rest of the list be the it can either be this where you re where the beta is rising or it can be where the beta is still approaching 0 on the other side it would be on page.
4 of the screen or the way i set it up so that anyway. But i just kept going this way and i went up to about comcast s i think and stopped there and said all right well. I heard maybe jpmorgan apple..
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I think i said yeah i stopped at apple or aig alright. So i actually have however many your on each one of these let s see well whatever i anyway i typed them up so. What you do is you buy shares in each of these companies. I ll just leave well i ll leave this list open here for a while and guess anyone wants to copy it um first of all try this in paper trading for simulated trading to see how it works.
But you you buy shares in each of these car you re going along you re not shorting these companies you re just going along on each company. Then you re going to sell call options okay you re gonna sell call options that are above the current price. The level. I would say look at the eeeh.
The e mini s. P. That would be the symbol is for that index. Anyway is es.
In thinkorswim. It tends to be es with the month code like july. Because n..
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18. If you re insane ninjatrader is probably gonna look something like that just type in es. Or put. In emini.
Sorry. He d be mini s. P. You can also anyway.
So you can also look at this one this is an etf spyder sp y. That follows the s p. Very closely um. So what you re gonna do is the second step after you buy these you re going to sell call options at a price strike price.
That is higher than current say es quote. By five or ten. At least..
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So i d say five to ten just to start the strategy off i did something like 15 or 20. I did some more reading. And i believe it supposed to be about five or ten higher you re gonna sell those options. I did that for they like the next three strike dates and then with the money made in that department.
You re going to then free going to buy put options at current quote at the current quote price basically of es or whatever spui etc. Okay. That s what you re gonna do and that is the bernie madoff method okay i m sorry i don t have really more visuals here. But i hope that that it s called a split strike.
I don t think you need a hyphen in there conversion. If you want to just look it up on your own. ” ..
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