Impossible To Reliably Make 80%+ Per Year By Selling Puts or by Trading Option Credit Spreads?

Discussion in 'Options' started by RichLyons, Feb 24, 2018.

  1. I'm talking about with margin, however that might be calculated. For example, $10,000 of a trader's own money, plus however much margin is needed to turn that trader's $10,000 into $18,000+ at the end of the year and so on.

    Is this possible to do in today's market? I have seen at least two professional traders say that as of a year or so ago, "margin account requirements and other regulations" have made these kind of returns impossible now. What exactly does that mean (even though it seems pretty easy to understand)? Does anyone agree or disagree? Assuming that margin account requirements and other regulations weren't a factor, is it still next to impossible to make these kinds of returns with these two options trading methods (or any other methods)? Which kind of trading method is the most likely to real in these kinds of annual returns, even though they would likely be risky?

    Thank you.
  2. Many many people do things like this another example would be selling vix calls or selling puts that aren't cash secured it works great until one day and it when it doesn't and your account goes into a debit.. so no one with any experience just shorts tail risk arbitraryly
    cvds16 likes this.
  3. i960


    Key word right there, meaning don't just sell vol mindlessly or you'll get carried out eventually. Sell it opportunistically. But it opportunistically.
  4. You can make 80% in a week. Your $10K account magically transformed into $18K. Boom.
    If you know how to predict and anticipate and trade and manage the a Jedi Yoda Ace trader,

    99.84% of people/traders have never done it, or seen it to them, everything is essentially science fiction.
    Make Trading Great Again 2018, ET extraterrestrial trader...High-Five` o_O
    Last edited: Feb 24, 2018
  5. zdreg


    based upon your questions you are lacking in basic knowledge of options, you should not be trading them.
    Last edited: Feb 24, 2018
    Windlesham1 and Handle123 like this.
  6. spindr0


    With covered calls and syn equivalent short puts, most of the time you eat like a bird and occasionally you sh*t like an elephant. Margin heavily and you have a high prob of blowing out your account. Your broker will miss you.
  7. DeltaRisk


    I’ve done it, and much more than that in a year.
    It depends on what exactly he means, on actual or leveraged capital.
    Actual, I’ve never seen it consistently.
    Leveraged, it’s not actually that difficult, but you won’t be able to do it with only ten thousand dollars. You’ll need relationships to do that consistently, not to mention an edge.

    The poster needs to find 100-150k and get a portfolio margin account, there is no other way. Sure, you can join a prop. But deposit props are basically shams now, you need to have a verifiable trading record to join any legitimate prop firm.
  8. He doesn’t need portfolio margin. He could trade futures and use span margin with a smaller account.
  9. ET180


    With portfolio margin, you certainly can. My portfolio has a positive delta bias so I short far out of the money calls with about 2 months to expiration (similar to Karen the Super-trader) to add negative delta. The difference is that I'm only short far out of the money SPY calls a small amount so that even if the market goes to the level where the calls go ITM, the rest of my portfolio has gained a lot to offset the loss. Of course, it's possible to earn a lot more by shorting a lot more, but in that case it's not an income-producing hedge, but a leveraged bet. Bottom line, there's no free lunch unless you have information that is not public. If there was an easy and consistent way to make 80% returns year after year, the entire market would have to be relatively dumber not to realize such a method.
  10. ilhomsher


    As far as I know IB has changed its margin algos so that if you do a hedged trade, initially it doesn't require much margin in portfolio margining, but as prices deviate further ,losses eat into your margin but gains don't offset it , thus you will require more capital to meet increased margin.
    #10     Feb 25, 2018