Credit Spreads - Reasonable Returns?

Discussion in 'Options' started by fakie99, Mar 24, 2008.

  1. fakie99


    i am putting together my trading plan and i am wondering what is a reasonable monthly return, or yield, on trading credit spreads on indicies. i would like to return 12-15% per month using this strategy - is this within reach or should i adjust my expectations? any thoughts would certianly be helpful. thx.
  2. ammo


    if you limit your risk to 5% a day and don't give a lt back,and you have found a profitable setup to watch and trade, that seems reasonable , 5% a day on 10k is $500 times 20 days is 10k, minus 25% for losers is 7.5k which is 75% return, sorry i didn't see the part about credit spreads, so disregaurd
  3. mihalich


    how do you calculate return?
  4. theta636


  5. fakie99


    thanks for the input. understanding that each trader's results are different, what would be a reasonable expectation for returns on a monthly basis using credit spreads?
  6. theta636



    Phil has a very lengthy journal on option spreads...2302 pages

    You can see what a very experienced trader earned month by month, and more importantly, how he managed risk.

    plenty of websites hawking promises of easy money with credit spreads and iron might get lucky, but without an edge and good risk management, the losing trades will wipe out an account.

    post a trade you are looking at, including the bid/ask for the trade. I'm sure the feedback will alert you to some issues you may not have thought of. Good Luck.
  7. cszulc


    I put on a lot of credit spreads (short butterflys/iron condors) that provide about 25% total yearly. I spread them between 20-30 ETFs/stocks in my swing trading account and it provides a nice income for me. Each credit spread works 75-85% of the time.
  8. Reasonable is quite subjective depending on your appetite for risk but 15% monthly? I wouldn't even dream about it. With a credit of 15% on your account, an adverse move against you and you'd be instantaneously wiped out.

    I'd look at 2-3% a month as somewhat reasonable on a small account (less than 250k).
  9. 2%
  10. exactly.. and the -67% will most likely come when you are selling 1000 contract spreads at low volatility, then out of nowhere the shit hits the fan and you lose everything you made in the past year (or worse)
    #10     Mar 24, 2008