How to turn $1000 into $1,000,000 with options in less than 6 years

Discussion in 'Options' started by crayon851, Nov 28, 2014.

  1. Have you done it?

    Have I done it? Nope. But I'm going to try.

    This is probably old news, but I'll share it anyway. Just having it broken down into manageable visible goals may make things a lot easier for some people. At least it does for me.

    Let's start with $1000 dollars.

    Let's also assume that between the bid/ask spreads there is at least 1% to be made on a daily basis with the contracts.

    There are 252 trading days in the year.

    If you're able to earn 1% compounded over the course of the 252 year trading period, that's a multiple of 12.27x per year.

    With that,

    Year 1) 1000 -> 12,270
    Year 2)12,270 -> 150,552
    Year 3) 150,552 -> 1.84Mil.

    That's 100% success rate every day. Pretty hefty huh? So is making 1% a day reasonable using options between the bid and the ask? Are you able to do that everyday? Probably not. Unless you're really good. I'm always hopeful for that.

    So what about making a 1% gain every two days?
    This gives us a multiple of 3.5x

    year 1) 1000 -> 3500
    year 2) 12250
    year 3) 42875
    year 4) 150,062
    year 5) 525,218
    year 6) 1.83 mil

    With options the gains are so minor, that the 1% spread is highly possible. For example, with an average contract of about $50 or 0.5 x 100 shares, IF you're trading with Interactivebrokers, where commission is $2 round trip (4% @ $0.02), you'd have to make a spread of $0.025 to make that 1%. We all know the spreads on options aren't that small.

    I guess this is more or less HFT, but the math supports that its possible.

    So what's the best way of accomplishing this or the safest way? Who knows.

    Personally, I think it'd be better to sell puts that are ways out of the way and try to close them at a 1% profit. That way, your risk is limited to your cash on hand.
  2. xandman


    Your thinking too far out the bell curve,man. Option trading is supposed to be infused with pragmatism. Put the hash pipe down. That same bell curve gains in options can produce a mirror tail event that would produce a blowout.

    However, yes....the best strategy in hindsight for the last 6 years was selling long duration (deep) OTM puts. If you don't puke or have sleepless nights during vol spikes, you get an awsome sharpe ratio....which in essence makes (extreme) leveraging a wise choice.

    Now $1000 to $10,000 in 6 years using no leverage. I can read that thread all day.
  3. If you can make1‰ return a day without any loss for three year. GS will hire you with a 100 millions salary a year, and here is your million.

    I found out recently there are too many gamblers in this site. The only claim from those novice is I don't have 500k accout, so the only way i can do is to gambler my 1k accout via some high risk strategies. Any chance you can success? The short answer is yes but at the same time 99.9999% of them failed horribly. This is no different from going to vegas ( betting 35 numbers in roulette and pray the last two numbers won't come out for the last 500 times and you make your 2.7% per trip), another way is just go buy lottery ticket, or get a time machine to past and buy bitcoin.

    Note: Try the roulette option, it will give you a pretty close experience as your proposed strategy, generally you will win in row for several times, and make you feel like a genius that unlock the secret to be millionaire, then one failed bet will bring you back to reality. LOL
    Last edited: Nov 29, 2014
  4. the whole point is to show that you just need to scalp the bid ask spread and that anything is day at a time right?

    is it hard? hell yeah. you dont have to use puts. Im just exploring, that if youre selling puts on stocks you dont mind owning, with the ultimate goal of making $0.025 a day on that put, then you just need to do that 251 more times lol.

    the bid ask spread is already more than 0.025, so why cant ypu make the bid ask? even if you just use bull put or bear call spreads, its still doable.
    long shot yes, if youre basing it on theoretical probabilities, but im sure there are people out there who have done it.
  5. There are people that make it, take the example of the "Super trader Karen". The question you have to ask yourself is if you one of those 0.001%, or the 99.999% loser ?

    As I said, if you so good in your "gift instinct " and trading skill, GS has no issue to hire you with a 10 million salary.
  6. well ill let you know ;).
  7. xandman


    You can scalp 1-5 lots from time to time. Don't expect to possibly have an edge on the bid/ask spread. Other people have that edge already, they are called market makers. In the last couple of years, business hasn't been that good.
    Jimmy Ray and trickshot like this.
  8. xandman


    Praise to Karen on her spectacular success. She is one of those long running stories that ET tracks for a spectacular blowout.

    She probably knows that she just had the right strategy at the right time. Either the strategy peters out or she has a spectacular blow out. To quote her: "have to buy tickets to Mexico". Wise woman with incredible humility. If she adapts and flourishes in a new market environment, then she is a certified guru.

    I hope there's no accounting fraud underneath as some ET'ers suspect.
  9. well yeah im not saying that youd have an edge, im just saying that when its broken down into that, it looks pretty reasonable/doable.
  10. Do you mean like the bank on the other side of you bet will just give you their money ? Isn't it more logical for them to take your $1000 in 2 days ?
    #10     Nov 29, 2014