I also see no Math bodge way to beat options, yes in a strong market you can make good $$'s, but in a weak market your pretty much stuck with shorting options, comes down to as always doing the right thing at the right time, which is tricky as it's about predicting the future. I made GOOD money, wayyyyy beyond 20% in a year, like 1000%++ trading puts in a strong bear market spent loads then lost the account pretty much over night on a gap up and reversal Obviously your talking of loads of contract, puts and calls same time and short positions of both aswell, to make regardless, still don't see it being consistent and profitable.
Is it possible to make >=20% expected geometric mean returns per year with options?" Yes. but you have to know what you're doing, the devil is in the details, you gotta have the right risk appetite, yadda yadda yadda. (it's not as clear cut, and simple, and obvious and easy as just simply doing it)
Your 3. The markets are just people, or computers controlled by people. Are people completely random? If someone yells in a crowded place, "Bomb! There's a bomb here! Everyone get out!" can you predict that people will panic and run? Is that random? So people are not entirely random. Neither are the markets; they are just people. Now, if HUGE news comes out, like from the ECB early this a.m. (look at the US dollar chart), or the NFP tomorrow (almost guaranteed to affect stocks in a big way), or the Fed meeting in about 12 days (interest rate decision will be a monster)...and a HUGE candlestick forms on the price chart, don't you think that is not random? This can be exploited. There are other subtle ways that the market behaves like groups (herds) of people.
It's literal. I played more like 1.6 million per year actually. I played in many tables simultaneously (8-30 depending on the modality I was playing), so I played from 800 to 1500 hands per hour.
Sure. If you believe that the cash equity market is not efficient, how can the derivatives off which those stocks are priced be efficient?
Testing a large number of strategies You make a good point, if you're a HFT shop and can run a fraction of a second ahead of the news on that then you've got a legit edge that is replicable and stands up to statistical analysis. "Exploiting" the candlestick afterward is not something that holds up to any rigorous analysis, which is not to say that in your antecdodal case you didn't succeed in 20% profits year after year.
Its does NOT matter it is options or others. Note that modern capitalism was held roughly 400 years after opening stock market in Netherland. If there is one person (one trading logic, starting with average wealth) who kept annual compounded 20% over THE 400 years, then he (and his sons with THE LOGIC) take all the wealth IN THE WORLD. Buffet and Gates should be empty hands now. It is since 1.2^400 is more than current population. Since there WAS NO PERSON at all over the 400 years, we can say that there will be NO person with annual 20% compounded in the future too. PS) Suppose you can live for 40 years from now. Probably1.2^40 = 1469.772 times is maximum. As for Buffet who spent 50 years in investment, he may make 1.2^50 = 9100.438 times than his original seed. For example, with a seed of 100K, 100K*9100=910M might be the max, with the above propostion. Furthermore, I have seen many who attains more than annual 10% compounded.
How much more you can make over just buying and holding depends on how much you want to invest and how big the market is, that's obvious. As your capital keeps increasing, then your expected returns diminish, and you finally can't get more than just buying and holding. When I created the thread I was thinking about a small amount in comparison to how big the market is (like 6 or 7 figures invested in the US stock market, which is nothing).