AIM and Puts -- For years I have heard of "protecting your stock position with Puts (put options)".
There are probably "millions" of books about options, but I came across "How to Make Money Trading Listed Puts" by Lin Tso. Dates from 1978 and only a few copies available used on Amazon. It's an excellent book with lots of examples, from just buying Puts to doing Put spreads.
How to Make Money Trading Listed Puts, by Lin Tso takes you to the Amazon info page.
A point of interest, p. 42:
"Trading for Down Fluctuations
Under the protective umbrella of a put option, one can play down fluctuations of the underlying stock.
This trading technique involves making a number of short-term transactions through buying the stock on dips and then selling the stock out on rallies. There is no limit to the number of trades that can be made against a particular put during the life of the option."
I don't know if Puts would be cost effective with standard AIM, as all or most of the $50 to $500 or so that a Put costs will usually disappear, so you have to make that amount and more on your AIM buys and sells during the life of the Put.
So, one of the more aggressive forms of AIM, like LD-AIM or ?? would be more suitable, if any at all are.
The Put would possibly solve one problem -- running out of cash for AIM Buys as the stock declines, as the Put would generate some on the stock price decline
And, again, volatility in the stock is needed, so that the AIM Buys and Sells within a range would offset the Put expiring worthless if the stock doesn't decline, or even rises.
Off the top of my head. Comments? Anyone played this?
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