If you think the markets will recover just buy an index following ETF. If you want high leverage, find an index following ETF that trades in very high volumes (e.g. -- voo) and buy options deriving from it.
A large difference will mean a SWAP arbitrage opportunity.
So no, there is no loan shark. You are getting a privilege (margin liquidity) and it has some real risks (default on the base loan, and the loan shark kissing his money good bye)
The problem with options and futures is that they tend to be thinly traded and so you lose on the spread. The net result is the same: unless you guess right with odds better than chance, your net alpha will be negative.
Not really. Depends on what you are looking for. Remember, on a leveraged trade you can 1. lose all of your capital and 2. be forced out of your position.
If you are using options, you are guaranteed to lose if you are not right. But you don't lose more than that. It's like a "bet".
> So you have to be able to guess right >50% of the time just to break even
I see this line dropped a lot on trading forums. No, you don't need to guess right most of the times. The outcome is not binary and fixed. You can guess wrong 10 positions and lose $500 on each, and then guess right one position and make $20k on it.
> The problem with options and futures is that they tend to be thinly traded and so you lose on the spread.
Spread works out both ways. If you are the taker, you pay. If you are not in a hurry, then you can be a maker and actually make the difference. So you win on spread.
BTW, your blog is down.
https://thehftguy.wordpress.com/2016/11/01/docker-in-product...
I would sell around 32 delta out of the money put on SPY. You have around a 68% chance to make a profit. This is a naked position so you need to understand that it has undefined risk.
You could cover yourself by buying a further out the money put. My investment philosophy pretty much coincides with the tastytrade.com guys.
If you want to learn more, I would checkout dough.com and do the free course on there.
I dumped a bunch of cash into the market right after the Brexit vote. Wasn't planned, the timing just worked out. Not bad getting a 3-4% return in the matter of a couple weeks.
Will that happen this time? Not sure! But the market probably did over react.