Quote from yip1997:
Do you have an idea what your average monthly return on capital is? I trade mainly rut and use spread to increase my leverage. I like to compare the result of your span margin leveraging with my rule-based margin.
I used to write naked calls and puts, but I use spreads now to increase my leverage.
Quote from domestic:
my return this year has been about 10 percent each month. again, i feel that in doing spreads you are placing your bets closer to the market to receive that tiny premium. i am further away than spreaders,i receive a greater premium, and i can manage a position gone bad better...imo. again, to reiterate; with the last runnup many people lost money because they were closer to the market with very small premiums so the loss was in many cases multiples of the premium received. i had no problems. if my short was to go from say 2.5 in value to 5 or 6 , i will close the position. that is a 2:1 risk reward; not unlimited.
starting in january, i plan on going further out for a 6 percent return and remove approximately 70k from my account and work with 30k. i will still make a nice income.
Quote from yip1997:
Thats a very good return. I am using spread not for protection, but for leveraging. How much span margin do you normally use when compared to your capital?
Quote from domestic:
right now , overnight margin set aside is 25% of my account. very important to know is this changes based on so many reasons. therefore i would recommend figuring maximum margin for all positions (3500 per contract); although it rarely gets to that point. you also need enough to roll if that's what you want to do. the worst margin for me was 60% set aside when my short calls were 25points above the underlying. learn as much as you can about span margin and remember, if you can get 6 to 10% per month for every 10k, that adds up fast. also, it is not easy, it takes work to earn that.