I am new to this forum and I am new to options trading, I started in late november of 2020. I feel like it has been extremely easy trading options and my success rate has been about 96%, is this normal? Is it the market? Trying to figure out if it is luck or if my strategies are actually working. I have been trading stocks for about 10 years so I have a pretty good feel for the markets and certain sectors/equities. Would love to hear from you all!
Trying to Gauge Options Trading Strategy Success
- Thread starter highonoptions
- Start date
Just basic strategies of buying underlying asset, writing a covered call ITM with the intent of turning over the shares but keeping a nice premium to do so, obviously reducing my upside, but still make decent gains. Also been selling a lot of PUTS pretty far OTM on equities with high IV.
I don't know what strategies you're trading, but my first thought is the old Wall Street adage "Never confuse genius with a bull market." I've seen a bunch of new, young option "gurus" popping up on social media, Youtube, etc., who talk about how much they make by selling naked puts, covered calls, the "wheel strategy," credit spreads, etc. I don't think they have any risk management plan if we have a crash. Some weren't even around a year ago for the COVID crash. Those who were saw the markets fully recover in under 6 months and think that's normal for a 30%+ drawdown (it's NOT). Whatever you do, make sure you're prepared for a long grinding bear market like 2000-2003. It didn't recover until 2007...followed by another crash. The market didn't reach sustainable new highs until 2012-2013 (even longer for the NASDAQ).
I'm not predicting that will happen, but be prepared for any scenario. Many valuations for stocks are at or near all-time highs (meaning they're overpriced).
I'm not predicting that will happen, but be prepared for any scenario. Many valuations for stocks are at or near all-time highs (meaning they're overpriced).
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Definitely makes sense. I only go week to week expiration, My risk tolerance is probably about a 5 out of 10. I have never sold a naked put or use any complicated strategy. Everything I am doing, I either own the underlying asset and write a covered call, or I sell PUTS OTM but that have a decent IV with no known even in the week that I am trading.
This has been the juiciest time to sell vol in the last 12 years.
don’t plan your future finances on your performance in the last 13 months.
don’t plan your future finances on your performance in the last 13 months.
How long do you think is needed to determine whether to trade full time? Isn't there money to be made in all markets? Don't you just need to adapt your strategy and ensure that you do not have all of your $ out there when a big correction does come?
You've been trading for 10 years. You should know the answer to these questions. if you don't then you have your answer right there.
Matt_ORATS
Sponsor
You might backtest your strategies and compare your performance.
Here's a ITM buywrite in AAPL
For selling covered calls, you'll need to calculate your opportunity cost of losing your upside. 95% success rate may be misleading.
In a bull market, selling puts may just mask your risk.
"Trend (Market) is your best friend". So if you believe the current trend is to continue, you can continue to do the same.