Author Topic: anyone levering indices using warrants?  (Read 1853 times)

schoenbauer

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anyone levering indices using warrants?
« on: March 25, 2014, 02:06:22 PM »
dear mmm-forum,

i have the strong belief that we more or less agree that indexing is a heck of an idea! so we do assume that those indices will grow in the long term. so i was thinking - hey, why shouldnīt i try to lever the gains investing continuously in long-term call-warrants on the S&P500 with a lever of letīs say 3.

has anybody of you done it? what are your experiences?

anisotropy

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Re: anyone levering indices using warrants?
« Reply #1 on: March 25, 2014, 03:01:19 PM »
i think it costs too much for it to be a viable strategy....

beltim

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Re: anyone levering indices using warrants?
« Reply #2 on: March 25, 2014, 04:04:05 PM »
If you're interested in reading this strategy I recommend reading "Lifecycle Investing" by Ian Ayres and Barry Nalebuff.  They found that the chances of losing money were too high at 3X leverage, but 2X leverage was quite profitable.

kyleaaa

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Re: anyone levering indices using warrants?
« Reply #3 on: March 27, 2014, 01:13:06 PM »
Lots of people do this. There are plenty of academic papers advocating something like 1.5x leverage but nobody really advocates 3x leverage that I'm aware of. Do some googling and you'll find plenty of data and analysis.

 

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