Options trading return estimation
- Thread starter k31453
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Short premium OR short the market? How much you will return, or how much a long-term, consistently profitable options trader will make? How many positions are your spreading that 40% against, what products are you invested in and what strategies are you employing?
There are lots of variables. But if you give me the same 'broad' condition set, I can confidently make 20% year on year average, through bull, bear, blackswans etc over the long term.
40% Total risk from portfolio roughly 10% each trade.
Trading mechanically generally Straddle, Strangle or Iron Condor.
Selling preimum portfolio for roughly each trade ends ~30 days.
Yes I wanna know how long i will make in 1 year and yes also how much consistently profitable options trader will make?
Also I am putting roughly 4 positions with 40% risk. Strategies include straddle, strangle or iron condor and manage it 50% max profit.
This is a bit broad with option sellers. Over the long term (3 years minimum for options sellers) I'd say only 10-20% of traders are profitable. Of those, probably 10-30% is a good average return. Exceptional ones can be a bit higher.
If you need to ask this question my best guess is you will make 2-4% a month for a few months and then have a big draw down. That's how I went when I started sold options years ago.
How come you had big drawn down? Did you do it on Australian stock market or US?
We are planning to trade full on US using TOS
Both, I traded spreads on Aus and naked shorts on US. Big draw down comes from selling options generally having really bad risk to reward. You're bound to lose bigger than you win.
How have you managed to open account with TOS last I heard they weren't taking Aus clients. Anyway decent broker for your purposes and whatever you do do not do it on Aus markets. Scam spreads & brokerage.
From what we observed, Australian market has **** liquidity so we stick with US.
3 of our friends started company and we manage to open with TOS.
By the way we did simuation on TOS. we used strategy and we haven't loss significant money. Highest we lost is one trade out of 15 which was $400. We only do mechanical trade though. But yea end of day every trader is different.
Trading in general, probably has <20% success rate... this is not because of 'options'.
Yes, there are a broader range of tradeable, liquid options in the U.S.
Trading 'real money' vs 'fake money' can change your psychology and force you to be less mechanical. Also the 'play' account will fill you the moment prices are 'touched', and so you may experience slightly different results.
If understand that the shorter you are in equity premium, the more bearish you need to be in equities you are already ahead of the herd.
Personally I'm premium seller advocate, because this is what I understand and this is what works for me.
Yes, there are a broader range of tradeable, liquid options in the U.S.
Trading 'real money' vs 'fake money' can change your psychology and force you to be less mechanical. Also the 'play' account will fill you the moment prices are 'touched', and so you may experience slightly different results.
If understand that the shorter you are in equity premium, the more bearish you need to be in equities you are already ahead of the herd.
Personally I'm premium seller advocate, because this is what I understand and this is what works for me.
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Out of interest, how do simulators respond to DITM american style written options? Do they presume that the option will be exercised at some point?
Understandable as real money vs papertrade is different thing. But we made plan and strategy in papertrade. We papertraded exact amount we actually gonna make investment. So i hope we can make real money this time lolz.
I am premium seller too. We usually go either bearish or neutral strategy.
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