Advice on Trading options as a career

Discussion in 'Options' started by escrow, Jun 19, 2007.

  1. escrow

    escrow

    I have been trading options for a year now. I have a full time job developing software. I am seriously considering switching jobs to do Options trading full time as doing both is really taking its toll.

    I was wondering if OptionsCoach or any of the other full time options traders have any advice.

    I saw a similar thread on Day Trading with a ton of replies..just trying to see if the same applies to Options trading. If there are any links already about this, please point me to it.


    My stats:

    Total time trading options - 1 yr
    Total profit so far - over 130K (lucked out on a couple of trades where i invested around 50K on Apple before it broke out, not really an options expert)
    Options knowledge - i read a ton of books and magazines.

    I am planning to work for another few months, sharpen my Options and then quit

    Planning to start with 50K - 70K

    I have a qn about taxes when you are an options trader but I'll keep it for another thread

    thanks
    ----
    escrow
     
  2. Before answering I have to ask, is the above what you are basing on quitting a salaried job to trade options full-time and support yourself? Cause luck is not what you use to trade and make enough to live off of.
     
  3. 50-70k could make for a modest living if you received PM/TIMS treatment. Virtually no chance to make a living on that sum.

    You'll need to trade prop -- Coach may have some prop-specific advice to offer.
     
  4. mde2004

    mde2004

    You got lucky with Apple options and expect to duplicate that over and over again.
     

  5. Hmmm I doubt I want to advise a lucky newbie to leverage his account... Also I dont see PM being an asset if you are trading different equity options, it only makes sense if you are doing index options and futures and get cross-margining.
     
  6. escrow

    escrow

    Hi OptionCoach,
    thanks for responding.
    That's a good question and something I ask myself too.

    I am basing my decision on:
    a. the money i have made (as a fall back). I would start off reinvesting the profit.

    b. the options knowledge i am gaining (making more and losing smaller amounts of money)

    c. technical analysis i am using which i had no clue about earlier

    As i mentioned earlier, I am planning to spend more time learning the basics and only then quitting my day job
     
  7. Do not quit your job, keep working while getting better at options and seeing if you can be consistent. Do not quit until you have 6 figures in capital and one year of salary safe as a fallback.

    Until then, fire away with any questions you have and use this time for the learning. Options can be quite profitable but it takes time and more than luck, it takes consistency.

    Loading up all your ducks on one positions and hoping it turns out okay is not the way to do it. Learn to do it the right way and the market will wait for you, no need to quit before you are ready.
     
  8. escrow

    escrow

    mde2004,
    that's the first thing that comes to anyone's mind. Apple was great but not something I might be able to reproduce anytime soon.
    Before aapl, i was averaging around 4k a month with a full time job. Not exactly luck as I was doing some homework. Of course I also blew 3K in a day when Goldman sachs downgraded one of my stocks

    what has changed:

    i am transitioning from a buy a call / buy a put mentality towards lower risk spreads.

    Given i am a newbie, with probably some luck factored in, i am trying to get a realistic picture as to what's next.
     
  9. "i am transitioning from a buy a call / buy a put mentality"

    If you have made money by just buying calls or puts on select securities then you are not really an option trader, you are merely betting on a stock going one way or the other and using options to leverage your money.

    Ditto to what Coach said:
    "Do not quit your job, keep working while getting better at options and seeing if you can be consistent. Do not quit until you have 6 figures in capital and one year of salary safe as a fallback." If you ignore this advice please tell me where you live and I will be happy to stop by and slap you.

    Having only traded for a year you have not really seen much except a low vol bull market. There is a lot more that can happen that you have yet to experience. As to your question of "what's next" I would say keep reading/leaning and trade conservatively. By trying different option strategies on different securities you can not only diversify but learn about new strategies. Do you have a firm understanding of the greeks, do you have a theoretical pricing model you can use and graph out all the scenarios, do you know how to properly interpolate a given vol curve and use it? Based on your posts I would guess that you have more to learn than you think.
     
  10. PM doesn't allow cross-margaining between futures and index options. It allows cross-margaining between index options, stock options, and stocks.

    But for the OP, let me suggest that you do this for a few more years and build up to 500k minimum before even thinking about making the career change.
     
    #10     Jun 19, 2007