Part 4/7:
With a core position that encompasses nearly 100% of the investor's assets, the need to generate additional alpha becomes paramount. Following a year that initially yielded impressive gains of around 160%, a more cautious approach to managing risk is now being adopted. The focus shifts towards a more conservative strategy that continues to pursue profitability while mitigating significant losses.
A pivotal strategy discussed is the implementation of a options trading approach, particularly through the use of “naked puts.” This strategy involves selling out-of-the-money put options while simultaneously buying long puts to protect against margin calls.