To what degree do you believe people should actively manage their money? Are you advocating that people should be more active in choosing their distribution of assets across risk:reward categories, or are you advocating for more active trading?
The reason I said both is because of the 'maintaining' part. Without some level of activity, its effectively impossible to be engaged with the market enough to take advantage of opportunities and manage your portfolio to keep enough diversification and reduce the internal correlations in your holdings/strategies.
It might sound complicated but it can be learned and it isn't rocket science, and there is a lot of great technology to assist anyone, not just software devs. Managing your life savings is a better investment of time than many other pursuits, in my view.
Even if there was no edge in the market, as in your premise, it's still the case that the upside of a long S&P 500 equity position is unlimited, and the upside of a long S&P 500 equity position with an option sold against it is limited, therefore would be priced to have a superior chance of success relatively speaking. More market participants would improve the price accuracy of risk, it wouldn't reduce the price of risk to zero.
As for whether its worth it, I think the aggregate effect is significant and, of course, is subject to the benefits of compounded returns, so it doesn't take much to severely outperform your other prospects in the long term. It's up to each of us to decide if its worth learning.
edit: typo
I don't know about every buy-write index investments, but BXM specifically is done with essentially ATM (technically the very first strike OTM I believe) calls against the long position, then held to expiration and cash settled. In a long bull market like the present day, this approach will always underperform the market while having reduced volatility. It should overperform the market in down or sideways markets. Also, volatility induces drag so in a compounded return, all else being equal, lower volatility will yield higher returns.
Diversifying amongst uncorrelated products is an important missing feature to this strategy for the purposes of reducing volatility. If only considering writing covered calls/puts, I'd personally prefer to reduce volatility through diversification, and sell further OTM options to reduce basis so I keep more of the directional risk in each individual position and have lower transactional costs.
Also, BMX holds contracts to expiration rather than benefit from cyclicality in price and implied volatility by closing/rolling options early when they move in your favor or scaling into positions during volatility expansions.
I agree with your premise, and make a pleasant bit of side-income selling covered calls on individual stocks that I own, but it seems like the buy-write indices don't actually fare well, or at least $BXM doesn't. Way worse than I would have expected actually...any idea why?
Since indexes by themselves have such low overhead costs, more complex strategies have difficulty generating superior returns.
For those wanting to go a step beyond but still lacking time to go deep, where would you recommend starting education wise? Any links or a syllabus with links would be super useful.
In short, that site largely revolves around the fundamental premises of a random-walk view of prices, and using the time-decay of selling options to reduce the cost basis of holdings over time. There's a lot of treatment and research on correlation of different assets (equities, different kinds of commodities, currencies). My advice if you follow this is to start small and stay actively engaged without getting over-confident at early success. There is a lot of getting used to the mechanics and learning the products so that you can make it a manageable part of your life, time-wise. Also you need to make sure you properly understand the relevant notional values you're dealing with so you can do proper sizing.
BTW quick answer to your first question, here's a sample basket of lesser-correlated assets that the typical index funds that all boil down to being long the market. One of the cores of having a random-walk view of things is that the choice of direction (long/short) is less important than the strategy & cost basis reduction (all of these have liquid option markets):
Long S&P (/ES or SPY) Long Gold (/GC or GLD) Short Bonds (/ZB or TLT) Short WTI Oil (/CL or USO) Long Euro/USD (/6E or FXE)
You may or may not make money on your directional choices, but the core strategy is to be short option premium to make your expected value positive, and to have low internal correlation amongst your assets to reduce volatility in your portfolio.
I'm not 100% sure I understand what you're trying to say re: upward bias/downward bias. However, buying options do have a negative expected value so I agree about that. Selling options is the strategy, and conceptually is similar to selling insurance. Limited profitability, positive expected value. Just like an insurance company, you keep your risk diversified to reduce volatility and keep positions small enough to prevent busting out during drawdowns.
I'm not suggesting buying options (except as part of a spread)
Thanks for the explanations!