What fraction of capital needs to be allocated to puts in order to mimic the performance of allocating 100% of capital to long stock?
According to our study, the results show that allocating 18% of capital to puts gives us the same return as holding 100% of SPY.
Furthermore, we can outperform long stock by allocating up to 60% of our capital to puts. Therefore, when we trade options, we can mimic the performance of long stock and still choose from a wider variety of risk/reward profiles.
Tune in as Tom and Tony break down this information in-depth!