These accounts vary in restrictions depending on jurisdiction, but essentially the main commonalities are limited ability to position short (long puts only), and no direct access to margin.
Off the top of my head :
1) Buying deep ITM calls (eg buy a SPY 250 call, it costs approx half of SPY and returns the same dollar change but a larger percentage)
Downsides : often high cost of leverage (like 5% premium to asset value), limited time horizon - if you bought march 2020 spy 250 calls for leverage a year prior you may have lost it all, while stock holders did not see any expiry
2) Buying levered instruments (3x daily etfs)
downsides : volatility drag, liable to blow up in a 2008 style crisis, expense ratio
3) Buying mutual funds or other funds that use leverage on your behalf (eg PSLDX)
downsides : expense ratio, limited transparency for some, often illiquid and difficult to enter or exit on short time scales
4) Borrowing money (eg line of credit, refinance mortgage) to contribute to your tax advantaged account
downsides : you can lose more than just your investments(bank can come for your assets), might be screwey with contribution limits to tax advantaged accounts
Are there any other methods i'm missing? Thoughts on what the best way is? I feel like it's likely deep ITM options. Eg - SPY 150C for Dec 2023 costs ~$30k rn, gives you a notional position of 45k for a leverage ratio of 1.5x.
Submitted September 04, 2021 at 02:47AM by PmMeClassicMemes https://ift.tt/3jPfabL
