impossible to make monthly income..with options spreads without BIG money!

Discussion in 'Options' started by increasenow, Sep 17, 2009.

  1. impossible to make monthly income..with options spreads without BIG money!..how does the little guy make money, real money trading bull or bear spreads or much less naked short puts or calls?...you need HUGE cash to do this to make any real money...HUGE cash...thoughts...
     
  2. erol

    erol

    i'm still a newbie...

    but forcing monthly income on a stock for me would be a losing strategy.

    when i think i've found a good trade, i put my money in

    bull spreads can take time....

    i had to wait ~2 months to make my trade successful.

    bear spreads I have to feel comfortable and think that the underlying will stay or go up.... that can happen anytime.

    my thoughts... monthly income would force losing trades. IMO (for me).
     
  3. wartrace

    wartrace

    It all depends on what "real money" means to you. I can live on 1200 a month (I own my own home & don't do consumer debt :) )

    Some say 4 to 6% per month is achievable given enough experience. An account of 100k could throw off a comfortable amount.
     
  4. How does the little guy make real money trading?
    He becomes a big guy! :)

    If I'm capable of a 10% return on my money, to make a $1,000, I need $10,000. But if I want to make $10,000 at that return rate, I need $100,000. That's life. You need more to make more.
     
  5. Big money is relative. In percentage terms, what do you consider big money?

    I'm new to options having only been at it since may or so. I've been generating income trading options with an average trade of 2.57% and an average holding period of 14 days (selling premiums not spreads). To me that's pretty big money if it can be done consistently month over month. 2.57% compounded for 12 months is about 35%. '



    - Ray
     
  6. The days of easy and painless selling of risk premium (whichever way you look at it, options just being a specific example) are over.

    Some of the whole throng of peeps that were picking up pennies in front of the bulldozer got crushed. Now nobody is willing to lend you money to run these strategies, 'cause they're afraid you're gonna meet the same fate. That's just the way the cookie crumbles at the moment.

    However, the mkt has a very short memory, so you probably won't have to wait too long before you can play games again.
     
  7. Tom1am

    Tom1am

    An easy way to make a small fortune in stocks or options is start with a large fortune and let greed and impatience take over.

    I have clients that have become very wealthy by saving/investing a few dollars per week over a long time, 30-40 years and let compounding do the work. Time is your best ally..and capital preservation. Stay out of bear markets and you should triple the markets return.
     
  8. yes but Ray...how much do you need in your account in order to sell naked options...that is the whole issue
     
  9. that's why if you are going to do something like that, at least do spreads... It will give more premium per dollar of margin used
     
  10. You have it exactly right.

    It the percentage return that matters, not the total dollars.

    If you are a profitable trader, your account will grow and the total dollars will increase.

    In addition, if you act prudently and save money every month (pay yourself first), you can keep adding small amounts to your account. It won't remain too small for too long, if you continue to make profits and deposits.

    Mark
     
    #10     Sep 18, 2009