$1MM liquid -- how difficult to achieve 15% annual ROI with option writing?

Quote from nitro:

This stuff is elementary, I don't even know why I bother to respond to these questions. We are on a trading website, and you are asking why 1 + 1 = 2.

nitro
More...
Nitro,
Not to belabor, but I didn't ask any question.

Don
 
Quote from a529612:

The thing is how good are you at picking stocks? Option writing can't help you unless the underlying stocks are acting in your favor.
More...

You don't pick stocks, you pick indexes for bulk of your option writes. I make 5-9% every month consistent income. Had a 8% loss in August, but since than I have been doing 10-15% a month to date and the gravy train hasn't stalled yet.

I can't say a newcomer can duplicate that, but I know lots of people who make lot more. It all boils down to how good you are with what you do in life.

NDX, RUT are my favorites. NDX has delivered solid gains since August 16, 2007.
 
Quote from platinum:

Interested to survey the opinion of options vets on this board. I have recently retired from a lengthy career and have several $MM tucked away in managed assets with a trusted financial planner.

Needing something to do with my time, I am curious about the possibility of taking up stock option writing with a portion of my assets as a full time occupation. Question for the board members is the following. How achievable do you see a 15% annual return for options writing, after a guy studies for a good year? I would set aside $1MM of the assets to do option writes.

This would only meet my goals if I can convince myself that 15% per year is attainable. I welcome any thoughts from those of you on the board. My understanding of options is good, I have watched from a distance for many years yet I would need to spend time studying before venturing into the market on my own.
More...


Why do you not stuff that in MUNIS, BONDS, MONEY MARKET account by default and make slightly lower rates without risk? Or buy stocks and write calls against them.

Option trading isn't for every soul out there. People have lost fortunes and got burned. But this line of work attracts a lots of interest everyday.

A good option investor makes 5-9% a month. If that is what you can achieve well and good. But without considerable knowledge ane experience I would not count on it.
 
Quote from nitro:

I don't believe the original post anyway. No one in their right minds with several million dollars of hard earned money comes to an anonymous web site asking for advice.

This is some troll or an idiot or someone who gets paid to start threads on ET.

nitro
More...


Yeh the original post is a troll. Agreed.

But I answered him back anyways. If you have made millions why would you come here and start asking about options? Makes you wonder whats the motive behind it.
 
Generally, what strategy do you use?

Do you recommend doing credit spreads on SP500 futures?

What to do if the underlying market price moves against you?

Please answer these questions, I am keen to learn and open to new ideas

Thanks
 
Quote from Optionswriter:

Generally, what strategy do you use?

Do you recommend doing credit spreads on SP500 futures?

What to do if the underlying market price moves against you?

Please answer these questions, I am keen to learn and open to new ideas

Thanks
More...

Options writing with the random entry points is good for the income but not for the capital growth. Eventually it will deplete your principal because the income comes out of it. In the bullish market you can achieve much better results with the long calls.
 
Quote from Optionswriter:

Generally, what strategy do you use?

Do you recommend doing credit spreads on SP500 futures?

What to do if the underlying market price moves against you?

Please answer these questions, I am keen to learn and open to new ideas

Thanks
More...

You might want to look at calendars.
 
Quote from guy990opl:


1) the odds are in your favor 2) taking profits becomes simple aka no emotions 3) being close $ is good enough 4)time is on your side 5) perfect timing is no longer necessary 6) definable risk control.
More...

1) Simply absurd. There is no implicit edge in buying or selling options. Any initial position (long or short) is immediately a loss in the retail world due to commissions and the spread. Any edge (or perceived edge) is due to one's reasoning behind initiating the position. Only time can then statistically prove the actual edge.

4) Time is on your side. Volatility and curvature is not.

5) Again, completely absurd. Gamma is inversely linear to theta.

6) Sure, short volatility and, probably in your case, short cheap gamma. An easy way to lose a lot of sleep and feel a lot of pain...
 
Interested to survey the opinion of options vets on this board. I have recently retired from a lengthy career and have several $MM tucked away in managed assets with a trusted financial planner.

How achievable do you see a 15% annual return for options writing, after a guy studies for a good year? I would set aside $1MM of the assets to do option writes.
More...
Here's my two cents, in a simplified answer... Put the bulk of the money in A rated preferred stocks (S&P and Moody's) which yield approximately 6.50% presently. You can trade them and easily bump the yield up another 6.50% (when one is up, sell it and buy something that is down, thereby maintaining the income stream and increasing your yield). Use the balance of the cash for option trading to get you past 15% and higher (?).

Follow the cycle. Once every year or so there's a moderate to major correction (see this summer). Pfd's are already up 10-15% from the 8/16 bottom. Bump the allocation in pfd's up when this occurs. Decrease it when paper rallies. You'll have a steady income. some trading income and the options will be gravy.

Second worst case scenario is that you hold 6.50% paper for while and garner some trading profits. Worst case scenario is that we're glowing during nuclear winter :)
 
You must log in or register to reply here.
Back
Top