How much can you make with 100,000 $ and what drawdown with annualized figures?
How Profitable Is Writing Options
- Thread starter ironchef
- Start date
How much can you make with 100,000 $ and what drawdown with annualized figures?
Oh, if you don't expect it to stay above 100... wow, thanks! Wait, but... who are you exactly? A person with 10K+ posts on ET, that is what I see but maybe you could elaborate, no? Janet, is it you?!
Why you should care about Sharpe (or whatever similar measure you want to use):
Volatility robs you of returns. I hope the below will print out legibly. Consider 2 methods, both with a mean return of 10%. The method that is more volatile has a lower cumulative return. You may not think $152 is that much less than $161, but multiply this out over more periods with more volatile returns, and it becomes real money.
If you are withdrawing from the portfolio, the situation becomes even more critical.
Year Return-Method A Cum. Return on $100 Return-Method B Cum. Return on $100
1 10 110 10 110
2 10 121 -10 99
3 10 133 20 119
4 10 146 -5 113
5 10 161 35 152
Volatility robs you of returns. I hope the below will print out legibly. Consider 2 methods, both with a mean return of 10%. The method that is more volatile has a lower cumulative return. You may not think $152 is that much less than $161, but multiply this out over more periods with more volatile returns, and it becomes real money.
If you are withdrawing from the portfolio, the situation becomes even more critical.
Year Return-Method A Cum. Return on $100 Return-Method B Cum. Return on $100
1 10 110 10 110
2 10 121 -10 99
3 10 133 20 119
4 10 146 -5 113
5 10 161 35 152
Sorry it's not that legible, can't figure out how to do it. But, volatility matters. As for options, you have correctly figured out that the market is efficient, theta is not an edge, and simple swing trading methods that seem like they "should" work do not always work that well. You'll need to come up with a method that can predict volatility, direction, or both, then use options to trade it. Options do not provide any new magic, only leverage and/or hedges.
I asked a simple question.
You write naked calls?
Damn baby, you have just blown my cover!
