Add training workflow, datasets, and runbook
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Buying Options
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and Treasury Bills
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Numerous strategies have been described, ranging from the simple to the complex.
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Each one has advantages, but there are disadvantages as well. In fact, some of them
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may be too complex for the average investor to seriously consider implementing. The
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reader may feel that there should be an easier answer. Isn't there a strategy that
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might not require such a large investment or so much time spent in monitoring the
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position, but would still have a chance of returning a reasonable profit? In fact, there
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is a strategy that has not yet been described, a strategy considered by some experts
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in the field of mathematical analysis to be the best of them all. Simply stated, the
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strategy consists of putting 90% of one's money in risk-free investments (such as
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short-term Treasury bills) and buying options with the remaining 10% of one's funds.
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It has previously been pointed out that some of the more attractive strategies
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are those that involve small levels of risk with the potential for large profits. Usually,
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these types of strategies inherently have a rather large frequency of small losses, and
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a small probability of realizing large gains. Their advantage lies in the fact that one or
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two large profits can conceivably more than make up for numerous small losses. This
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Treasury bill/option strategy is another strategy of this type.
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HOW THE TREASURY BILL/OPTION STRATEGY OPERATES
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Although there are certain details involved in operating this strategy, it is basically a
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simple one to approach. First, the most that one can lose is 10%, less the interest
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earned on the fixed-income portion of his portfolio (the remaining 90% of his assets),
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during the life of the purchased options. It is a simple matter to space out one's com-
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413
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