CNBC

[crwood]

Just from reading some of Kim's articles in the past I know he loathes most things CNBC (and for good reason...never trust the media).

I don't usually get to see the yahoos that come on at 5 p.m. ET where they talk about their options plays, because I'm trying to get out the door, but the few times I have seen them I've heard them talk about a strategy where they spend $5.00 to make $5.00. I have never spent the time to backtest or see if any of them work, but I was curious if anyone has ever used something similar? I suspect the ones those guys talk about are delta heavy in one direction and probably produce poor results. Any experience with this?

[Kim]

I had an article about CNBC - http://seekingalpha.com/article/387901-why-cnbc-s-fast-money-earnings-plays-might-be-bad-advice.

There are many strategies where you risk $5 to make $5. We know that risk/reward and probability of success are directly related. If you risk $5 to make $5, your probability of success would be around 50%. If you want higher probability of success, you need to scarify the risk/reward ratio.

BTW, in the RUT ICs we are doing we usually risk about $5 to make $5. In our case we close early so we never will make the full $5, but we also adjust so we never lose the full $5.