How much money do you put in option?

K

kaihui

Just started option trading. Got a question here.

Option can generate profit fast, but the risk is also tremendous (naked options). I'd like to ask you guys what percentage of money should I put in the option?(Naked options).

I want to be on the aggressive side, but not outrageous. For me, everyday is a survival game. I have $25000 in my account, and I constantly load with $20,000 options. Is this too much? I constatly see $5,000 gain or loss every day.

TIA,

Kai
 
Buying puts and calls is like casino gambling (except you dont have to breath in all that smoke and deal with all the rude people at the table).

If you have a 25k acct and are trading 20k each day. And have 5k up and down swings. I'm afraid you will soon find yourself broke.

You are probably like me; love to gamble. And options are a nice way to do it.

I'm not sure if you are day trading options or what? Options have such a wide spread that I would think it would suck to day trade them. Short term trades seem to work the best with options. You get major moves overnite or in a few days usually. And with day trading you miss on the major moves. Least thats the way I play options but then again I have a day job.

If I were you I would only gamble errr trade with only a 1/3 of my acct using option plays. So if you lose that 3rd you still have 2/3rds left to play with. And never put all of that 1/3 into one play.

Belive me you can dbl your money in one month even only using a 1/3 of your cash. But then again if you have a lousey losing streak you can lose it all too.

Again my fav plays with options are to play short term trades ie 2 days - 2 weeks. But that also has to do with that I work.

So how have you been trading options?
 
Quote from kaihui:

Just started option trading. Got a question here.

Option can generate profit fast, but the risk is also tremendous (naked options). I'd like to ask you guys what percentage of money should I put in the option?(Naked options).

I want to be on the aggressive side, but not outrageous. For me, everyday is a survival game. I have $25000 in my account, and I constantly load with $20,000 options. Is this too much? I constatly see $5,000 gain or loss every day.

TIA,

Kai
More...

I suggest you read some money/risk management books. 20% account equity swings in one day is way too much. As the previous poster has pointed out you're not trading, you're gambling and sooner rather than later you'll blow out your account.

I also trade options and my risk per trade is no more than 2% of my account equity. So if I had $25,000 for options trading then I would risk no more than $500 per trade. That is, I set my stop and size my position so that I'd lose no more than $500 if I'm stopped out.
 
you are f*cking nuts
with about the same account size I would never risk more than $500 per trade, and that's in case of a potentially catastrophic move
 
Thanks all for the help. I guess I am too aggressive.

Heer is my trading situation. Started on May 6 this year. with $25000 in my account.

Traded very light in the first week and made little money but built up the confidence.

Then in the next 10 days I did heavy on day trading. Gained a lot in the first 5 days, and confidence went to the moon. Then lost really bad in teh coming 5 days. Then stopped trading for 5 days just trying to clear up my mind. Realized day trading was not for me(I have a full time job, although I have rather flexible hours, daytrading is still too much ofr me).

Then openned an option account.

On June 9th, (a little overt one month after I started trading), I gained $7600, which is about 30% gain.

From June 9th to now, I only do Options. Last week, I got my money doubled.

However, I lost pretty bad on Monday (yesterday). At one point today I lost more than $8000.

I guess I am nuts. Sometime I got scared. (of course sometimes I got thrilled as well. Like last Friday, I gained $15,000).

So far, I think my success is mainly on the luck side. the more I trade, the more I am scared and confused. I know if there is a major down day like NYSE down 100 point, NSDQ down 30 points, my whole account could be wiped out.

Thanks again everyone.

Kai
 
Quote from kaihui:

...On June 9th, (a little overt one month after I started trading), I gained $7600, which is about 30% gain.

From June 9th to now, I only do Options. Last week, I got my money doubled.

However, I lost pretty bad on Monday (yesterday). At one point today I lost more than $8000.

I guess I am nuts. Sometime I got scared. (of course sometimes I got thrilled as well. Like last Friday, I gained $15,000).

So far, I think my success is mainly on the luck side. the more I trade, the more I am scared and confused. I know if there is a major down day like NYSE down 100 point, NSDQ down 30 points, my whole account could be wiped out.

Thanks again everyone.

Kai
More...

Once again, mate, this is not trading, this is gambling. And you're right, up until now you were lucky, so if one bad day hits you you're gonna get wiped out.
 
Quote from kaihui:

Just started option trading. Got a question here.

Option can generate profit fast, but the risk is also tremendous (naked options). I'd like to ask you guys what percentage of money should I put in the option?(Naked options).

I want to be on the aggressive side, but not outrageous. For me, everyday is a survival game. I have $25000 in my account, and I constantly load with $20,000 options. Is this too much? I constatly see $5,000 gain or loss every day.

TIA,

Kai
More...

========
Kaiihui;
Dont risk what you cant afford to lose;
can you afford to lose 5k /5 times in a row???
Unlike gambling, option exchanges dont throw winners out of the house & option sellers also publish probability of winning %called delta .:cool:

Yes that would be overly aggresive, if you have 25k total;
William J O'Neil , mentioning for profitable traders ,
mentioned 10-15%
 
Hi, Murray,
Unfortunately you are right. I got 3 losing days in a row. -$3,300, -$7,500 in the past two days, and today, as of speaking now, -$5,400 on my account.

Good thing is that I still have $10,000 gain on my acount since June 9th.

I may bail out. Losing 3 days in a row is not very pleasant.

Thanks for the advice.

Kai
 
When I'm trading options in my accounts I usually don't let my positions over 3% of my portfolio so for your account I'd think anything over $1000 is too much, thats just me
 
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