3K monthly income on a 100K account
- Thread starter aibanez
- Start date
I'm still waiting to see Karen the Supertrader at the drive thru ready to take my order for a Whopper Sandwich.
I view trading like any job or business, you can have your livelihood cut out from under you at any moment with no warning, any security or stability you think you have is purely an illusion.
What matters is that right now I don't have to work very hard to make a living.
What matters is that right now I don't have to work very hard to make a living.
Thank you dejatrader for your ideas and your data.
I'm doing something similar selling puts on some stocks that I confortably take ownership If assignment occurs.
RE: 3K monthly income on a 100K account
Below is an aggressive GOOGL naked put example that nets about 6% per month.
Below is an aggressive GOOGL naked put example that nets about 6% per month.
- $100,000 account.
- GOOGL at $590.00.
- Sell 7 contracts GOOGL Aug01, 2014 570.00 puts at $8.50 (ask $9.20).
- Income = $5,950.00
- Depends on how your broker calculates margin for final numbers.
- Margin Required = (25% of the underlying stockâs market value + the option ask price â any out-of-the money amount) x 100 (per contract) x the number of contracts.
- $95,690.00 = $147.50 + $9.20 - $20.00 x 100 x 7
What's the margin requirement if
- Goog falls 25%
- Vol explodes
- Broker / Exchange unilaterally increase margin requirements
As I pointed out that was an "aggressive" example, it's up to the OP to decide how to proceed. By using real quotes you get a better idea what to expect.
IMO there is no way dejatrader can get +15.41%, +19.16%, +29.26% and +11.57% monthly returns buy selling far OTM naked puts and sometimes calls. As you can see 6% monthly is pushing it to the limit with very little room for error if your strategy is selling options.
http://www.elitetrader.com/vb/showpost.php?p=3994292&postcount=35
Why don't I see the thread earlier?!
3% monthly return of $100K is easy. Just limit your single-time loss to 2% of your total capital.
If you can reach a 60% win-loss ratio, plus 1.16:1 reward-risk ratio. Do the simple calculation! Just do 5 trades a month, 3 wins 2 losses. You can reach 3% easily!
Isn't that simple?
Best,
3% monthly return of $100K is easy. Just limit your single-time loss to 2% of your total capital.
If you can reach a 60% win-loss ratio, plus 1.16:1 reward-risk ratio. Do the simple calculation! Just do 5 trades a month, 3 wins 2 losses. You can reach 3% easily!
Isn't that simple?
Best,
As I pointed out that was an "aggressive" example, it's up to the OP to decide how to proceed. By using real quotes you get a better idea what to expect.
IMO there is no way dejatrader can get +15.41%, +19.16%, +29.26% and +11.57% monthly returns buy selling far OTM naked puts and sometimes calls. As you can see 6% monthly is pushing it to the limit with very little room for error if your strategy is selling options.
http://www.elitetrader.com/vb/showpost.php?p=3994292&postcount=35
[sarcasm begins]You are aware that there are other stocks out there besides Google, yes?[sarcasm ends]
Your example illustrates why I don't sell naked on big name stocks, ETFs, indices or futures, namely, very little bang for your buck. A high priced low IV stock like GOOGL requires way too much margin and you basically have to sell ATM to get any premium.
As I type this your example option looks like this on my account:
GOOGL trading just below $590
Aug1 570 strike put is only 3.3% OTM and has a bid of $8.50
Margin requirement is $16,625
That's a 5.11% ROI with 30 calendar days (21 trading days) to go.
IMHO this is too much margin and too close to the money to trade. But if you're super confident that GOOGL is going to stay the same or go up then you can drastically improve your numbers by turning this trade into a bull put spread by buying the 565 put.
My numbers for this spread are:
The ask for the Short 570 Put - Long 565 Put is $0.50, bid is $2.50
Margin is $500
ROI now jumps to 10%
But you'd be stupid to take the ask price when you can easily get in around the midpoint of ~$1.50
That pushes ROI to 30%
I still wouldn't take this trade because it's too close to the money, but at least you're making better use of your margin. You now only need to use 10% of your $100k to make $3k. Although you would be at a high risk of losing your bet.
Because close to the money? 
My numbers show, that selling ITM verticals is much more profitable than OTM... why? Because all amateurs are selling OTMs, because they don't know how to correctly calculate win% and RRR with options, so they just play with high win%, they have their "hope mode" switch set to ON.
Maybe you should start with some serious research...