Is it possible to make >=20% expected geometric mean returns per year with options? Why?

[jk90029]

Regarding "My buddy probably helps this guy earn through commissions."

He is not rich, to buy grocery with friend's commission.


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Regarding "I lost over $250k of my own funds"

Most traders lose (roughly more than 90%) eventually, for the last 400 years of capitalism and in most country.
I am sure the market is zero-sum, BEFORE expense (comm+tax).
I guess the 250K went to other traders and comm and tax, / possibly 100K to unknown traders and 50K to comm and 100K to IRS.

 

[Gambit]

Probably not capital intensive, but it's super long term. It's standing timber...basically pine trees to be cut into pulpwood. They grow a bit faster than hardwoods. You basically buy a plot of land in the middle of nowhere and manage the crop, which isn't that hard. Each year, based on pulpwood prices you decide whether to do any harvesting or not. Prices are high, you harvest a lot - pulpwood prices are depressed, do nothing. They only harvest a small section at a time and then replant seedlings in those areas.

The vig comes in the form of additional side income. You can bail the pine straw that falls from the mature trees and sell that and you can do well to offer hunting permits on the land as well if it's placed correctly. There are other things you can do with a large rural plot like that to juice the income while you wait for your trees to grow.

I never got into it, but I think it's pretty cool.

Who does the labor? Is that outsourced and does it bring the annual rate of return down?

 

[Q3D]

Probably not capital intensive, but it's super long term. It's standing timber...basically pine trees to be cut into pulpwood. They grow a bit faster than hardwoods. You basically buy a plot of land in the middle of nowhere and manage the crop, which isn't that hard. Each year, based on pulpwood prices you decide whether to do any harvesting or not. Prices are high, you harvest a lot - pulpwood prices are depressed, do nothing. They only harvest a small section at a time and then replant seedlings in those areas.

The vig comes in the form of additional side income. You can bail the pine straw that falls from the mature trees and sell that and you can do well to offer hunting permits on the land as well if it's placed correctly. There are other things you can do with a large rural plot like that to juice the income while you wait for your trees to grow.

I never got into it, but I think it's pretty cool.

This is an elegant metaphor for the huge and ETHICALLY APPALLING presence of TA and trading educators/vendors, among the few % of those who actually make live trades with their own accounts on non-micro contracts.

In conclusion, TA trading educators and vendors who do actually trade are extremely rare (.1% or less based on observation) and among those .1% of approximately .1% of those are consistently profitable and among those who are profitable, for statistical purposes, 0 who are consistently profitable at all times, in contrast to their dishonest claims, therefore any profitable trader who is also a vendor or educator must adapt by pushing more educational/vendor products when supply and demand controls limits or nullifies profitability, as in your example of trees.

 

[OddTrader]

" Most mentors are rich. They mentor for other reasons. Smart equity and easy money, giving back, personal problems with their own kids, some sense of career dissatisfaction, sexual appetite, who the F knows? This mentor in particular is a large NY trader in a Los Angeles-based prop group. My buddy probably helps this guy earn through commissions. "
My responses are in the repost above...

Knowing too many rich mentors with too much detail about them individually could easily get confused!

 

[jk90029]

IMHO, worst trader bring cash advance of 10K (annual 20%) to security market.

Credit card company is smart to know there is NO PLACE in the world which grows faster than annual 20% compounded.

 

[BrandNewTrader]

Regarding "My buddy probably helps this guy earn through commissions."

He is not rich, to buy grocery with friend's commission.

Ok Guy. I think he has between 30 and 50 guys paying him commissions at the end of the day. It's called guaranteed income.



*************************************************************

Regarding "I lost over $250k of my own funds"

Most traders lose (roughly more than 90%) eventually, for the last 400 years of capitalism and in most country.
I am sure the market is zero-sum, BEFORE expense (comm+tax).
I guess the 250K went to other traders and comm and tax, / possibly 100K to unknown traders and 50K to comm and 100K to IRS.

Most traders lose and wash out of the markets forever. I came back 4 times before I "made it" the 5th time.

Not sure you are saying anything substantive here. Just making observations? You talk like "Boris".

 

[OptionsMocha]

I think for individuals with large accounts percentage return becomes less important. A 5% return on 10 million is more than a 20% return on 1 million is more than a 50% return on 100,000. As a trade or investment account grows it is wise to reduce risk and accept lower percentage returns as the absolute returns increase. This is why you don't often see long term double digit returns on large accounts, if the account is large enough it's just not necessary. Single digit returns will be enough to cover the financial needs of most investors if the account is multiple millions.

 

[ktm]

Who does the labor? Is that outsourced and does it bring the annual rate of return down?

He rarely goes up there. All the labor is outsourced. He says he averages 12% per year over the long haul. Seems consistent with others I've read about with similar operations. Some years - or even multiple years...you get nothing from the trees.

 

[Gambit]

He rarely goes up there. All the labor is outsourced. He says he averages 12% per year over the long haul. Seems consistent with others I've read about with similar operations. Some years - or even multiple years...you get nothing from the trees.

Well..worth looking into.

 

[conduit3030]

If it's possible, then that means the market in aggregate makes "mistakes", like there are growth stocks (lower expected returns) and value stocks (higher expected returns).

I'll keep studying, I think it's worth it. Could you recommend me something to keep learning? I feel like it's very hard to find valuable information about options, while there's plenty of useful information about value investing expected returns.

If you want to really get into options quickly, try Nadex (no I don't work there, I just think they're a great product)...you can trade for as little as ~$50/option and can really get your feet wet...