3K monthly income on a 100K account

[tom_czr]

Hedgefunds are noobs? ...oh, I forgot I was on elitetrader for a second, where everyone and his dog easily returns 300% or more per year. They should make an Elite Trader ETF that invests every call of the Elite Traders to the market, I'm sure it would be very successful.

Hell yeah they are. I was on some meeting and considering working with some... Finally I am on my own and I was not willing to work with any.

My most brutal experience was with fund managing aprox $50,000,000 where one trader was trying to convince me, that we are in times of VIX backwardation, but there was NOT! He was mistakenly looking at some VIX ETFs on CBOE website and thought that it were prices of VIX Futures :eek: ...
Based of what I have heard, those guys still keep their jobs there lol ... I absolutely do not understand how it is possible those guys are still managing some money. Unbelievable...
But hey, without such guys it would be much harder to make money in markets, so I am OK with it

 

[TskTsk]

Well yeah, many hedgefunds are super specialized. I wouldnt' expect a hedgefund trading FX to know anything about VIX futures for instance.

You do have a point about incompetence in the financial industry in general, as 2008 painfully showed (morons who cant even correlate mean wages and housing prices), but I dont think that means you'd be able to beat their returns by 200-300% like some Elite Traders claim to be able to...

BTW if you have been in job talks with hedgefunds and said no, then how come you are not running your own hedgefund by now instead of trading your own money? You should easily be able to attract capital if you make the figures you say...

 

[tom_czr]

I am much more optimistic about guys doing consistently range from 15% to 50% p.a. (stable overperformers of SPY) than about guys claiming to be doing 200-300% p.a., because from my experience those high percentage guys blow up quite often lol

And even if someone has high performance, it is not good to present such high numbers, because for most investors&"capital providers" it looks untrustworthy and risky even if we have great stability, beta neutrality, etc.
This is also my personal experience. From that time I am always saying that I am making lower numbers than I actually do...

And of course I am able to attract capital

 

[aibanez]

I am much more optimistic about guys doing consistently range from 15% to 50% p.a. (stable overperformers of SPY) than about guys claiming to be doing 200-300% p.a., because from my experience those high percentage guys blow up quite often lol

And even if someone has high performance, it is not good to present such high numbers, because for most investors&"capital providers" it looks untrustworthy and risky even if we have great stability, beta neutrality, etc.
This is also my personal experience. From that time I am always saying that I am making lower numbers than I actually do...

And of course I am able to attract capital

+1

 

[dejatrader]

I've been making a living selling options since last September and using a selling strategy for more than a year before that, and have made a little over 3%/month on average. But TskTsk is right, you're not going to get that on a steady monthly basis. Which means, if you want to average 3% you need to shoot for more, because there will be drawdowns.

Here's what my account performance looks like since I went full time in September:

Sep13: +15.41%
Oct13: +2.58%
Nov13: +3.74%
Dec13: +2.54%
Jan14: +19.16%
Feb14: +29.26%
Mar14: -5.33%
Apr14: -32.42%
May14: +0.70%
Jun14: +11.57%

I sell far OTM naked puts and sometimes calls and have a better than 90% win/lose ratio. The loss in April came from just 2 positions, and at one point March was up over 20%, but a single trade wiped it all out and more.

Of course the problem right now is extremely low volatility making for very low premiums.

 

[xandman]

Dejatrader,

That's very impressive. Do you sell mostly the index? How did you make so much in Feb from being short vol?

With your performance, it is hard to believe you don't have directional strategies,

You don't have to give the secret sauce, but thanks for sharing.

 

[dejatrader]

Dejatrader,

That's very impressive. Do you sell mostly the index? How did you make so much in Feb from being short vol?

With your performance, it is hard to believe you don't have directional strategies,

You don't have to give the secret sauce, but thanks for sharing.

xandman, I sell mostly single equities and some ETFs. I did 1 iron condor on SPX last month to try it out (never done an IC before) which made 5.4% but I didn't like how close to the money I had to be to get that.

Feb was just an exceptional month for premium/margin ratio and I was able to turn some of my account over (closing profitable trades and reinvesting the margin instead of waiting for expiration) more than once during the month.

 

[tom_czr]

I've been making a living selling options since last September and using a selling strategy for more than a year before that, and have made a little over 3%/month on average. But TskTsk is right, you're not going to get that on a steady monthly basis. Which means, if you want to average 3% you need to shoot for more, because there will be drawdowns.

Here's what my account performance looks like since I went full time in September:

Sep13: +15.41%
Oct13: +2.58%
Nov13: +3.74%
Dec13: +2.54%
Jan14: +19.16%
Feb14: +29.26%
Mar14: -5.33%
Apr14: -32.42%
May14: +0.70%
Jun14: +11.57%

I sell far OTM naked puts and sometimes calls and have a better than 90% win/lose ratio. The loss in April came from just 2 positions, and at one point March was up over 20%, but a single trade wiped it all out and more.

Of course the problem right now is extremely low volatility making for very low premiums.

How much money (percentage of account) do you have in margins selling those OTM naked puts?
Single trade wiped it all out and more? 20% of account? Seems like you are gambling little bit.

Anyway selling puts is OK strategy, but it is important keep risk under control.

How do you manage your options if market is getting close to them? Rolling them further and to later expiration? Would you be able with your actual exposition to manage 2008/2009? Please send us your simulations results.



I am attaching my own example.
This is equity of one of my systems, commission&slippage included, it even includes trades on stocks/options of bankrupted companies (survivorship bias free). This equity in attachment is without any leverage, for comparision SPY Buy&Hold equity is included... in reality I trade it with 1.5x leverage + other mutations of this systems with goal of smoother equity.

 

[dejatrader]

How much money (percentage of account) do you have in margins selling those OTM naked puts?
Single trade wiped it all out and more? 20% of account? Seems like you are gambling little bit.

Anyway selling puts is OK strategy, but it is important keep risk under control.

How do you manage your options if market is getting close to them? Rolling them further and to later expiration? Would you be able with your actual exposition to manage 2008/2009? Please send us your simulations results.



I am attaching my own example.
This is equity of one of my systems, commission&slippage included, it even includes trades on stocks/options of bankrupted companies (survivorship bias free). This equity in attachment is without any leverage, for comparision SPY Buy&Hold equity is included... in reality I trade it with 1.5x leverage + other mutations of this systems with goal of smoother equity.

Typically I use less than 50% of my available capital at the start of the month. Like right now for July I'm at 62% cash. But when I have profitable positions that I can easily close out to free up margin, I'll go much higher.

I'm with IB and have noticed that their margin requirements skyrocket in the last few days before expiration, especially if a position is getting close to my strike. For example, on June 9 I sold GWPH Jun20 100 Calls when it was trading at $76 figuring what are the odds it's going to go up $24 in 11 days? Well it almost did! Reaching a high of $93.87 within 30 minutes of closing. IIRC my account dropped to nearly 5% cash, but I wasn't worried about it, I waited and watched for a margin warning (which never came) and had lots of positions to buy back if needed.

If I think a call is seriously in danger of going ITM I'll close it and cut my losses, if I was that wrong about the direction of price I don't want to roll up and out and gamble that it won't just keep going. Besides, after a big run up volatility is usually crushed and there's nothing worth selling anyway.

With puts, more often than not I'll take the assignment.

I'm sorry, I have no idea how to backtest, and even if I did it wouldn't give you a very accurate picture for a highly discretionary trading system.

 

[tom_czr]

Typically I use less than 50% of my available capital at the start of the month. Like right now for July I'm at 62% cash. But when I have profitable positions that I can easily close out to free up margin, I'll go much higher.

I'm with IB and have noticed that their margin requirements skyrocket in the last few days before expiration, especially if a position is getting close to my strike. For example, on June 9 I sold GWPH Jun20 100 Calls when it was trading at $76 figuring what are the odds it's going to go up $24 in 11 days? Well it almost did! Reaching a high of $93.87 within 30 minutes of closing. IIRC my account dropped to nearly 5% cash, but I wasn't worried about it, I waited and watched for a margin warning (which never came) and had lots of positions to buy back if needed.

If I think a call is seriously in danger of going ITM I'll close it and cut my losses, if I was that wrong about the direction of price I don't want to roll up and out and gamble that it won't just keep going. Besides, after a big run up volatility is usually crushed and there's nothing worth selling anyway.

With puts, more often than not I'll take the assignment.

I'm sorry, I have no idea how to backtest, and even if I did it wouldn't give you a very accurate picture for a highly discretionary trading system.

Thank you for your savings in future