Should I replace some parts of my portfolio with an option strategy?

This post got 4 close vote, 3 downvotes, and 4 upvote on a comment on "this is not suitable for a Q&A site"

I really don't understand this. This question is clearly "I am considering using strategy A instead of B, has anyone tried it before and what's the result comparison?", where it can hardly be "opinion based".


gamma, keep in mind, the on topic / off topic is not 100% black and white. Note the meta discussion of questions I was prepared to delete as off topic, but others felt only needed a bit of editing to make on topic.

Note also, the 5 who voted to close were not mods, there were 'regular' fellow members. And I can't promise that this question would be reopened if the specifics of using the XLF ETF were changed to form a general question, e.g. morphing this to a naked put strategy question. In the end, Bob gave a decent answer which addressed this pretty well.

  • My $0.02: I would think that even if XLF weren't mentioned, "OOM puts on the finance sector" is still very specific. The larger problem is the "Should I...?" in conjunction with that. Jun 6 '19 at 14:31

Please refer to Help Center - What topics can I ask about here?. First, under what's on-topic, there's this part:

  • Investing and trading strategies, including fundamental and technical analysis and other techniques, as practiced by retail traders and investors. (again excluding specific recommendations and evaluation of conditions)

Second, under what's specifically off-topic, there's this part:

  • Requests for specific investment buy/sell advice; e.g. "should I sell X?" or "should I buy Y?" or "will X continue to go up?"

And here's part of your question:

[...] where I can trade option, and sell naked out of money puts on finance sector ETF (i.e. XLF) monthly. Since bank sector has been quite flat and underperform the [broad] market, I think this strategy will be superior than simply holding those bank stocks.

Essentially, your question is off-topic because the question's title begins "Should I..." and the question goes on to describe the idea of selling naked OOM puts on the finance sector. That's a specific investment and the "Should I" makes the question, more or less, a request for buy/sell advice. The part about "bank sector has been quite flat and underperform" also calls for evaluation of conditions.

Perhaps a better question to ask would be along the lines of "Here's a strategy I'm thinking of employing. [...] What are the risks and potential outcomes associated with this kind of strategy?". But don't ask whether it's a good idea, whether it is likely to be profitable given market conditions, how market conditions are likely to change, etc.

p.s. While I agree with the community voting to close the original quetion, if it were edited accordingly, I would cast my own vote to re-open.

  • I disagree with the closure votes. Apart from my guess that those who voted to close most likely don't have a clue about options, I agree that the OP was asking about an alternative strategy and that is a reasonable question. and is generic. The OP didn't ask "Should I sell XYZ stock?" Jan 2 '20 at 14:24
  • @BobBaerker Best thing to do when you disagree with close votes on a question is to edit out the parts that are tending to make the question off-topic. Naked OOM puts on the finance sector is, to me, asking about a very specific investment strategy, not sufficiently generic. If it were just, say, "writing calls and/or puts", that would, IMHO, have been sufficiently generic. i.e. Don't mention which market, which index, or which sector, otherwise it may lead answers to speculate on the direction of the thing. Jan 2 '20 at 18:50
  • I appreciate the suggestion but it's a bit of guesswork since people voting to close the question aren't providing an explanation of what they are objecting to. A lot of questions are closed on a variety of topics that in my opinion are valid questions because the answer would be informative. A lot of questions are also closed because the answer requires a product, of sorts. For example, who has the lowest commissions? Or who provides free option chains? Or best money market rates? You get the idea. Just my 2 cents but some of the regulations are too restrictive. Thanks for the answer. Jan 2 '20 at 18:59

I think the "has anyone tried it before" is actually the bit that's most problematic, as it's not clear if it can be answered or not. Maybe noone has tried, or maybe everyone has tried it and it'll get flooded with lots of different experiences.

Normally asking for general investment advice is ok but specific buy/sell recommendations aren't. It's a bit of a blurry line in cases like this and some people may feel it's too much towards the latter.

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