Options trading for a living

[trader198]

paycheck mentiality.
it is not doable for you.
do not quit your job, stay there.

if just for the sake of several hundreads per day
donot trade options. options create headache tax book keeping problem.

trade future, like a contract of crude, treasures interest is a good enough. $150 is just one to three crude 1' or3' bars. piece of cake, make sveral hundreds in day trading future in your account size.

day trade futures are better choice. you dont need book keep each trade for the tax purpose (nowash sale adj. etc.). plus you do not have PDT limitation, your account is just $20k, you can not day stock options!

of course you can trade future options, that is harder than stcok options since the volume is too thin, almost nottradable.

I trade options mainly swing, todaybuy, next day or next week to close. day trade options when optionis near expiration, like thursday/friday. most time, I hold days even weeks months in long term trend. but I hate book keeping, IRS should not set those damn rules. so occasionally I trade futures. I do not want to have hundred pages of trade record to report to IRS.

Quote from TSLexi:

Hi guys,

I'm thinking about trading options for a living. I have $20,000 saved up from my job, which I strongly want to get out of (escort), and I have had trading experience when I was in college.

My goal is to make at least $150/day. Since position sizing dictates I should only risk 10% of my total capital on a single trade, I need to make an ROI of 7.5%/day (not compounded, of course!). I plan to take the profits out of the trading account at the end of the week.

I plan on trading volatility, for example buying a call while shorting the underlying.

My questions are:

1. Do they make IV-based indicators, like a MACD, RSI, etc.?
2. Is $150/day a reasonable goal on a starting capital of $20,000?

Thanks!

 

[sonoma]

Quote from Squilly_D:

... finally how much an underlying has moved (price) in a 10 day period (+/- 5% or greater). I don't personally put a credit spread on until these events occur. These entry parameters may also contain the gap/large moves you speak off. This DOES NOT mean I'm right, but with time in the spread (20 - 60 days) and the other factors I mention above increase the probability of being right

Sorry to come to this party a bit late. But remind me what makes you think that a move of x% is any better time to short a vertical than any other?

 

[Squilly_D]

Quote from sonoma:

Sorry to come to this party a bit late. But remind me what makes you think that a move of x% is any better time to short a vertical than any other?

I don't know if it will be better for the trade that I do, but vol *should* be higher than if an underlying is just slowly moving in one direction. No guarantee of an win, just trying to fade a >+/-5% move with time/duration and potentially higher Vol prior to the trade (assuming no earnings around the corner if the underlying is stock).

I have this as a quick graphical indicator on my charts on thinkorswim. It is grey if its in between and green if greater (of course displaying the value with the color gradient). The caveat to this is that the underlying has to be liquid, the options need to be liquid (tight B/A) , and have considerable amount of open interest relative to the underlying. This eliminates a large body of underlying's and leaves one with maybe anywhere from 20 - 40 underlying's to do this in. So it's a lot returning to the well when those underlyings show >+/-5% moves.

I'm trying to find some research that tastytrade did here recently on this subject on I believe one of their Market Measures. It basically looked at different price percent changes over a 10 day period and compared different strategies in different *tradable* underlying's if memory serves me correctly. If I find it, I'll give the title of the show for anyone who would like to check it out.

 

[Squilly_D]

Quote from newwurldmn:

Can you show some credit spreads where the risk reward is less than 1.

My bad, for some dumb reason I was calculating reward/risk which returns <1. So yes, credit spreads have a risk/reward ratio >1 sense the credit one receives will be less than the potential loss that can occur.

So a shout out to drownpruf and newwurldmn for correcting me on that.

 

[Squilly_D]

Quote from sonoma:

Sorry to come to this party a bit late. But remind me what makes you think that a move of x% is any better time to short a vertical than any other?

I also wanted to add that this is one of many considerations I use to enter a trade. If the underying is a stock and earnings are near, I don't make the trade. I wait until the day of earnings to try and capitalize on the binary event.

 

[drownpruf]

Quote from Squilly_D:

My bad, for some dumb reason I was calculating reward/risk which returns <1. So yes, credit spreads have a risk/reward ratio >1 sense the credit one receives will be less than the potential loss that can occur.

So a shout out to drownpruf and newwurldmn for correcting me on that.

My apologies, as I had you confused with the tomcmcginnis fool.

 

[sonoma]

Quote from Squilly_D:

I also wanted to add that this is one of many considerations I use to enter a trade. If the underying is a stock and earnings are near, I don't make the trade. I wait until the day of earnings to try and capitalize on the binary event.

Understood. But the other characteristics seemingly don't trump the "extended" move feature because this one seems necessary for you to consider the trade, regardless of whether the other parameters are present. I was just querying whether this 5% move was an intuitive and thus discretionary characteristic or whether you had statistical confidence about price or vol movement subsequent to a 5% move. Standard finance theory would say that over many repetitions, 5% should not represent a unique number. It should be easy to test such a notion.

 

[Cmoss]

TSlexi, what did you end up doing?

 

[razvanneagu]

U wanna quit escorting to make 150USD a day ?!? Business gotta be tough out there...

Seriously, try to keep your contacts at least warm, you're more likely to lose a significant portion of ur 20k than make 150bucks a day out of it

HAHAHAHA IM DEAAAD!!!!! Im actually sitting in class reading this, and busted out laughing hahahahahhaha

 

[crayon851]

Obviously, every situation is different and you should take any advice on the internet with a brick of salt. However, here are a few thoughts:

(a) The general thought is that you can, fairly easily, produce 30-50 percent returns while trading options. Your capital base is smaller, so it is actually easier for you produce better returns on capital - you can take advantage of various capacity-constrained strategies and you have much lower liquidity requirements

I disagree with this statement. Mainly the "ease" of generating 30-50% returns. If something was "fairly" easy, a lot of people would be doing it. OR maybe I'm just doing something wrong.