Options premium income. How much is too little?

Average premium income selling 1 month option on solid non volatile stocks is 1-2%. What is the point of this strategy if you can invest in T-Bills and get roughly the same amount of % with virtually no risk?

 

In which universe do T-bills yield 12% a year?

 

1 month t bill ~1% no?

 

You are saying that the yield on short stock options is 1% a month or per year?

 

that's annualized 1%.

 

1-2% a month depending on volatility levels of course but with super low vix you get very little.

 

Yield till maturity. No?

 

Try short options on futures in your IB account. You can make 150% a year on premium to margin required.

 

There are so many dimensions to that question. If you're a market maker, even tiny premiums might make sense. As a retail investor however looking to turn 20% on a credit spread in a week is very possible.

It depends on what your strategy is and your risk tolerance.

Options are a really complex thing, and there's no such thing as a simple pre packaged answer.

 

1%-2% is too little when it doesn't compensate you enough for the risk you're taking. If the market is priced correctly it should be a wash minus fees over the long term. If the market isn't priced correctly you must have some view on either direction or volatility.