Want to make 1k / month on 100k, selling options.

TrustyJules said:
Maybe I dont get what you are saying here at all if you take in $0.02 on a spread for a total of 1200$ premium you were in for 600 options? If we take the oil price at 63$ you were trading the equivalent of 3.7M$ of the underlying which is way more than you should do with an account your size. Its low probability but at some point you will get hit mid-ship and lose your shirt. Whatever you were doing there dont do it again if it is close to what I outlined above.

As to your main question - there is no fail safe way to make 1K on a 100K a month, if there was a sure fire 12%+ return a year dont you think everyone would be doing that?
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It was 60 options. And yes, way to big for my account which was actually 50.000 USD at that time :) But because it was spread, margin requirement was about 10.000 USD.. So I figured with 80 % cash I am good to go :)) I have to check the trade when I come home. I am at work and write this from the memory. But I do know it was 60 options per leg. And I think it was actually iron condor now that I think about it. Because it was all together 240 options and I took in 0.01 premium from each spread. Also it was very tight condor, that is why difference was so small. I can write exact trade here later, just for example to other traders what NOT to do :))
 
Patience is a virtue and it certainly is in trading. I totally don't get why you don't want to wait for implied vol to be way bigger than historical vol ... it's about the only life-jacket you have when trading short vol ... You urgently need to learn a lot more ...
 
cvds16 said:
Patience is a virtue and it certainly is in trading. I totally don't get why you don't want to wait for implied vol to be way bigger than historical vol ... it's about the only life-jacket you have when trading short vol ... You urgently need to learn a lot more ...
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This is what I plan to do in the next weeks, months.. To calculate if those events are too rare or happen regularly enough to make it worth it. Then I would have to trade fairly big also, to cover other months just sitting in cash.. Just an example, a lot of people sell iron condors and spreads on SPX and we had like years now (ok until feb) without any sell-offs. Waiting for IV increase there would be very painful.. But I guess that is why one is not limited to only do it on SPX and better wait for high IV and do it the right way, with wind behind the sailboat.. :)
 
just go back two weeks and read the stories of what happened to vol-sellers who thought they had invented warm water by selling vol ... a little knowledge is a dangerous thing !
You don't have to give up your dayjob to do this kinda trading but you DO need to be patient untill all things line up. If things can go wrong you can be certain they will. Just look at the way how vol went through the roof in stocks in 2001 and 2008. Even selling way above historical vol didn't help much it only went further skyrocketing through the roof ...
 
You are correct. Thanks for pointing me in the right direction. I knew I was a fool for doing it this way that is why I liquidated all positions and decided not to open another one until I figure things out. For my risk averseness and better sleep maybe I should just go long underlaying and collar it. I do not like drawdowns and downside volatility so this should smoothen out the results over time. I did find one very interesting study on QQQ collar which had amazing results even in down year. Or specially in down years if I remember correctly. Because put got so much more expensive during sudden down move and you could sell it for nice profit while also earning profits on the sold calls. They tested many things - tight collars, loose, and then they did it also on 10 other instruments where results were semi good :) EEM and more volatile things did ok, others did not..
 
traderjo said:
With a collar how do you make money? if you close one leg then you have directional risk! don't you?
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Collar is not meant to be neutral strategy. And you never close any leg before the other. You let them expire any way they do and write both options again. That is if I remember correctly. The point of the collar is to be long underlaying, buy a protective put and finance it with the sell of the call. Or at least partly finance it. This way you give up some of the upside (depends on the strike of course), but gain protection. This is why results in the long sustainer upmoves were bad with collars, but where you gain most is during down years, where undelaying was like 40 % down and you had positive returns.. Then those years smooth each other out and you get returns with less volatility. I think protective collar during this long bull market now is a wise idea. Specially for those that do not want to sell undelaying due to tax or other reasons.. But since there is no free lunch I guess this strategy also must have some other risk I do not see yet :)
 
If it was just a question of "doing it". Why wouldn't every millionaire and billionaire just do it and earn more than the funds they invest in?
If you discovered something that others missed then yes, it's very possible.
 
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