John Richardson – Guns and Butter

John Richardson – Guns and ButterIncome vs Wealth BuildingThe Consistent Options Income trade that was published in 2008 was all about trying to create a high probability strategy that could turn accumulated wealth into a regular monthly income. However, I have had many inquiries over the years about how one could accumulate the wealth to begin with. The Guns & Butter trade is my answer to that question. It is how I attempt to accumulate and grow wealth. The perspective is longer term and the trading approach can put a lot more money to work. If you are looking to compliment your income trading approach or just want to put some money to work, this is a great strategy that should outperform the indexes over time. It is also very easy to manage monitoring as little as once per trading day.Consistent Options Income StrategyObjective: IncomeHighest ProbabilityMonthly PerspectiveGuns & Butter TradeObjective: Wealth BuildingHigh ProbabilityLonger Term PerspectivePut More Capital to WorkLow MaintenanceEasy to Trade and ManageGuns & Butter?In the world of Economists, the Guns & Butter Model attempts to describe the relationship between a nation’s spending on the military and it’s spending on civilian goods.A nation’s objective is to strike a balance that provides for a prosperous yet secure economy.In a Trader’s Economy, we want to strike a balance between holding financial assets (Guns) and selling premium (Butter) so as to provide a prosperous yet secure portfolio.Lock & Load…Wax On, Wax OffWe Need to Change the Way We Think About Our PositionUnburden Ourselves From the Myths of Conventional WisdomControl What We Can ControlAccept the Real Risk at Trade InitiationThe Market Rewards Risk TakersManage the Short Options Around Our Assets in a More Efficient ManorThere is a Better WayWhat is the Guns & Butter Trade?Long and/or Short Stock PositionsOptions to Enhance ReturnsSell Calls to Lower Cost of Long Stock PositionsSell Puts to Increase Selling Price of Short Stock PositionsBut How Do We Manage It More Efficiently?An Intelligent Options Adjustment Approach to Improve ReturnsImproved Performance Compared to Conventional Covered StrategiesAvoid the Traps Set by the Covered Call Myths