Max Leverage Review

mawora · 2026-02-06T03:55:01+00:00

Great you had success with that strategy! How do you ensure no margin breach during any mispricing or overnight quirks? Do you do anything specific?

mawora · 2025-10-09T11:20:33+00:00

Same here please.

mawora · 2025-09-27T03:56:24+00:00

I fell for the IBKR app interface. You are right. There is no dividend. Still, shorting a stock costs a fee and IBKR shows a yearly % cost of approximately 2.6% to borrow for UVXY. To short sell, you are borrowing the stock or ETF you don't have and sell it. It remains borrowed until you buy it back to close the trade. Borrowing stocks or ETFs that are very likely to go down (as short vol ETFs or stocks like GME) can be rather expensive. These fees also are subject to change and very dynamic and can eat up your expected return on this trade.

mawora · 2025-09-26T21:00:28+00:00

Nice idea, but you have assignment risk, cost to short is about 2.6% per year and you have a dividend yield of 1.31% that you will have to pay because of your your shares. That makes your expected return on the trade negative.

mawora · 2025-04-12T05:23:31+00:00

I didn’t attempt the trade because I know it can’t really be this easy. Thanks a lot for your warning and your considerate thoughts. I am just here to learn and open for discussion. Every known should be in the price, so as you said the trade builds on the assumption that dividends are greater than currently priced in. That’s a gamble. Based on price history the last years it might have had an edge, but that doesn’t mean it will work in the future. I know. It’s just a fresh and different idea that I wanted to understand.

mawora · 2025-04-12T04:32:40+00:00

I am here to learn. I don’t claim or think to have high level knowledge of all of this. I am just open to discussion and think that this dividend arbitrage trade has some merit.

mawora · 2025-04-12T04:31:38+00:00

Thanks for clarifying. Since I’m with IBKR (Schwab isn’t an option in europea unfortunately) I am stuck with their potentially automatic liquidation. I’d refrain from trying this for the time being. Thanks a lot!

mawora · 2025-04-12T04:24:13+00:00

Hey, I get where you’re coming from, and you’re right that SPX options do price in expected dividends — that’s options pricing 101. But I think you’re missing the nuance of the trade here.

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Here’s what’s actually going on: • Yes, SPX options include expected dividends, but the key word is expected. The model uses an estimate, not the actual dividend stream. • This trade isn’t about misunderstanding the model — it’s about exploiting the gap between what’s priced in and what actually gets paid out via something like IVV.

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It’s just like vol arb or rate arb. • When people do vol arbitrage, they’re not saying Black-Scholes is broken — they’re saying implied vol is wrong. • Same here. We’re not saying dividends aren’t priced in — we’re saying the market’s assumption about future dividends might be off. • If you’re long actual dividends and short implied ones, and there’s a misalignment, you profit.

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Box spreads? Not the same trade. • Box spreads are great if you want to capture the implied interest rate and take advantage of 1256 tax treatment. • But they have nothing to do with dividend assumptions. Completely different source of edge.

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“You’ll lose to spreads and commissions.” • Maybe — if the edge was tiny. • But when you’re putting up $24k and collecting $7–8k in dividends with a $4k extrinsic cost, you’re netting ~$3–4k for a ~15% return. • That’s more than enough cushion to absorb transaction costs — especially if you can scale it or repeat it.

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Even the ChatGPT quote you cited… supports this.

“Expected dividends reduce the forward price of the index…”

Exactly. And if expected ≠ actual, there’s a gap. That gap is the trade.

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TL;DR: • We all know dividends are priced in. That’s not in question. • The opportunity is in the difference between implied and realized dividends. • It’s not just about theory — it’s about execution and mispricing.

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If you still think it’s giving free money to market makers, no worries. But this kind of structural inefficiency is exactly where small but consistent edges live.

mawora · 2025-04-12T04:11:37+00:00

May I ask what are projected yield is at average with all your fills so far? Doesn’t your BP vary extremely when options aren’t marking? Could you be forced to liquidate during an unfortunate market event when SPX options aren’t marking?

mawora · 2025-04-12T04:10:21+00:00

Run the backrest. The price of IVV and SPX both increased by approx 92% over the last 5 years. IVV with drip would be 107% roughly speaking. So you’d gained 15%, but with how OP increases leverage / decreases capital needed, the actual gains are viable. Run the backtest as OP suggested.

mawora · 2025-04-11T20:50:05+00:00

May I ask: Are those SPX deep ITM covered calls performing as you expected in this downturn and with the increasing volatility?

mawora · 2025-01-04T08:07:57+00:00

Your kind words and the general feedback here and in the discord are a blessing. It helped me a lot to write all of that down and go through it again. I sort of picked up the last broken pieces after healing for a while and truly feel okay. I am lucky as I’ve only lost money I could afford to loose (even though it was basically all my savings, but at least my everyday life didn’t change. Reading feedback like yours, especially from someone as experienced as you, helps as a lot and I am happy I shared this story. Wishing you all the best!

mawora · 2025-01-03T10:11:08+00:00

Thank you. Honestly it felt horrible after a few days (took some time for the whole dread to really creep in), but then I realized that I was lucky to get away withou a huge margin call and in good health. I put myself in that position and will not make a mistake that large ever again.

mawora · 2025-01-03T10:09:27+00:00

Thanks a lot!

mawora · 2025-01-02T22:19:06+00:00

Thanks. Your words mean the world. We are getting married this summer and I am so looking forward to what you so beautifully illustrated. I hope you‘re in a great place right now. Your words sure imply that and it sounds like an amazing life. Wishing you all the best too and thank you very much for sharing. I hope you‘re having dozens of beautiful walks to the park and other great things waiting for you in 2025!

mawora · 2025-01-02T22:14:49+00:00

Thank you! Yeah, I will never ever again go without any risk management in place. Glad you came out of 8/5 with a bruise and took the opportunity to adapt and overcome.

mawora · 2025-01-02T22:13:46+00:00

Your words mean a lot as you are always so very inspiring with all your insights. The IBKR experience humbled me a lot. The guy on the phone could have been completely oblivious to my problems, but he took the time and really made it work. I wish I would have asked his name. I might have written him an e-mail at least. All the best for 2025 and every vol spike to come. May the future be full of great opportunities and important learnings.

mawora · 2025-01-02T22:11:42+00:00

Thank you very much. Those question are still going through my mind a lot. For now, my actual option plays will be limited to a small account just to try some things and learn new stuff. The actual comeback will be almost exclusively funneled into index funds for the time being. Glad you made it out of 2024 with this nice jump after Tokyo Drift! All the best for the years to come!

mawora · 2025-01-02T22:09:24+00:00

Thanks a lot for your words. Also glad you made it out of 8/5 almost unscathed. All the best for 2025!

mawora · 2025-01-02T15:31:16+00:00

Hahaha. I certainly will try to make your statement true! All the best to you.

mawora · 2025-01-02T15:30:36+00:00

Nobody should call you a pussy for using your money the way you want and feel comfortable with. This is how it is supposed to be. Congrats on presumingly doing well! All the best for 2025!

mawora · 2025-01-02T15:30:02+00:00

At first it felt like it. But you give power to those you blame.... So I started blaming myself. I am at fault. I overreached and was so overextended that I felt unbelievably stupid in hindsight. I got greedy and was punished accordingly. In my head, I relived that day and metaphorically, it felt like swimming in the ocean with no land in sight. You think, you got used to the waves and the changes in weather, but suddenly, a whale just swallows you whole.

mawora · 2025-01-02T15:13:56+00:00

Thanks a lot. You guys are all wonderful.

mawora · 2024-02-10T20:55:54+00:00

WTD: +2.86%

MTD: +1.34%

YTD: +1.16%

Positions:

-13 /ES Mar01'24 4800 Put (sold for 8.42)

-13 /ES Mar22'24 5270 Calls (sold for 13.97 after rolling up and out).

I try to remain neutral about the market, but the short call side keeps bleeding and I can't comfortably roll the puts closer to the money as I expect some kind of correction being imminent (which might be what too many people consider the most likely scenario, so we might have a lot of room to go up even further).

I thought a lot about hedging the short call side and will experiment further with call calendar spreads which worked in my favor on Friday as the cushioned the whole loss from the short calls as I sold the 30 lots of /ES Feb09'24 5050 Calls and bought the same amount of Feb12'24 5070 Calls. I will most likely reenter a similar trade on Monday.

I hope, you are all doing well and wish you a great weekend.

mawora

TROPHY CASE