How's your Money Management in Options Trading ?

Quote from nell:



that also means i only have 1%-2% reward from my entirely portfolio in a month (usually i collect monthly premium)
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Would you rather have a system that nets you 1-2% per month, or one that provides significantly more, but introduces the risk of losing your entire account? Because if you are using everything in the account as margin on condors, the latter is what you are doing. Personally, in your situation, I would trade about 2K in condors and put the other 8K in something much safer. Then, no matter what happens, you'll end up with your account reasonably intact. But that's just me.
 
Quote from drcha:

Would you rather have a system that nets you 1-2% per month, or one that provides significantly more, but introduces the risk of losing your entire account? Because if you are using everything in the account as margin on condors, the latter is what you are doing. Personally, in your situation, I would trade about 2K in condors and put the other 8K in something much safer. Then, no matter what happens, you'll end up with your account reasonably intact. But that's just me.
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Agree completely with the sentiments from drcha above. Most likely the condor trades would have significant correlation (meaning that if a market upset crushed one, it would crush most or all of them). That means that a single 2 or 3 sigma upset / unusual event could wipe out most or all of your capital.

Trying to make 10% return on capital per month for any significant length of time in any style of speculation / trading is not realistic. Almost all those who try blow out sooner rather than later.
 
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