I made a 450% Return on my investment thanks to this crash today!

Discussion in 'Options' started by prc117f, Feb 2, 2018.

Can I milk this into a career?

  1. yes make tons of money teaching your system

    4 vote(s)
    33.3%
  2. no go back to trading.

    8 vote(s)
    66.7%
  1. --------------------------------------------------------------------------------------------------------
    schweiz, this is exactly what I was going ask?
    If he only used 1% ($3k) of his $300k account and could duplicate this trade only 40% of the time and lost 60% of the time the entire -$3k premium, he would nearly double his total account every 100 trades:
    400% win x $3,000..........= $12k
    40 x $12k win.................= $480k
    60 x -$3k loser................= -180k
    Total gross account gain...= $300k

    "Here in lies the problem, how often can you get a market transition so powerful (like this past
    week), that it generates a 400% gain in either puts or calls in a day or even a week?"
    (Note: Op was buying Feb 7 weekly options and this was a same day trade.)
    Question: "Can that happen 40 times a year?"
     
    #11     Feb 3, 2018
  2. prc117f

    prc117f

    The problem is even having a probability of 40% on such trades is unlikely. Most likely I would lose my hard earned trading capital trying to play such trades. I actually made a similar win with a OTM call and made a 320% return. so 2 times in my trading career making such crazy return on small wagers.

    Statistically achieving such returns with long OTM positions near expiration are very unlikely, less than 40%. Pricing does get distorted as they get near expiration making it difficult to accuratly price these options and this is why sometimes when you have these sudden market swings these OTM option prices get a bit crazy.

    I would not recommend trying to achieve such returns via large positions. This is why my wagers are small and VERY Infrequent unless I see something that makes them worthwhile to consider taking a gamble on one, and then using a small amount of capital.
     
    #12     Feb 3, 2018
  3. tomorton

    tomorton


    My own rule for trades is that if the trade set-up fits my plan, I go in with the max risk my account will allow, never more, but never less. I'm looking for asymmetrical r:r: I'm already happy with the set-up and the capital risk so there's no need to just dip a toe in the water. And imagine the sick feeling when that one tiny test trade turns out to be the one that explodes.
     
    #13     Feb 3, 2018
    SimpleMeLike likes this.
  4. tomorton,

    Can you go into detail with an examole please?

    So if your a count size is $20k, and you see a setup, you risk (increase lot size or more stock shares) the entire $20k on this one setup?
     
    #14     Feb 4, 2018
  5. tomorton

    tomorton


    You have to be kidding. We all love a joke but just in case you're serious -

    The max risk I would take for years has been 2% of the account. In the last year I have increased this as I became more familiar with and profitable from the strategy I'm using. I have very rarely heard of a trader risking more than 10% of their account and I wouldn't ever do it either.
     
    #15     Feb 4, 2018
    SimpleMeLike likes this.
  6. Thanks tomorton,
     
    #16     Feb 4, 2018
  7. You hit a lottery ticket put for under $1k and you are acting like you hit the lottery. I have never seen a good trader glaze his knuckles over such a trade..... jeez act like you have traded before...
     
    #17     Feb 4, 2018
    d08 likes this.
  8. prc117f

    prc117f

    You must not be a fun person to be around. you seem to take things way to seriously. Life is to short to be this dry and humorless.
     
    #18     Feb 6, 2018
    El OchoCinco likes this.
  9. Saltynuts

    Saltynuts


    LOLOL. He was smart taking it slow, waiting for the market to REALLY crash and to then get in. :)
     
    #19     Feb 6, 2018
  10. prc117f

    prc117f

    Options prices were so distorted the last few days. I took a few small wagers and bought 283.5 calls that were 6 cents and then as the markets went down they calls actually were worth more so I sold them. Then it went up to to the 80 cents range!
    Distortions in pricing. even options with 1 day left were trading at inflated prices big time. exciting week.

    not as big as the last return but 351.33 turned into 942.65 for a profit of 591.32 dollars.
    been lucky with these last few lotto trades.



    SPY Feb 16 2018 283.5 Call 4,100 --- 351.33 --- 942.65 591.32 168.31 Short-term
    Sell to Close.LIFO 2,000 02/06/18 141.95 02/06/18 377.71 235.76 166.09 Short-term
    Sell to Close.LIFO 2,000 02/06/18 202.28 02/06/18 538.04 335.76 165.99 Short-term
    Sell to Close.LIFO 100 02/06/18 7.10 02/06/18 26.90 19.80 278.87 Short-term
     
    #20     Feb 7, 2018