Writing options for a living

Discussion in 'Options' started by torontoman, Jul 28, 2005.

  1. Can this be done? Has anyone tried it? Any comments?
    SupermanTrades likes this.
  2. Writing naked options can seem very rewarding until the day that shit happens. And it will. Then you'll regret the day you ever started, and wonder what happened to all your profits on those little premiums you've been collecting, that have just vanished as one of your underlying stocks crashes through the floor and leaves you looking at a huge loss.

    If you are successful in trading the underlying...and you'd better be to even think about writing options...then just stick with trading the underlying. No need to take on a high risk/low reward strategy that can really hurt you if you're in the wrong place at the wrong time.
    VPhantom, zghorner and JSOP like this.
  3. are you talking naked or covered calls,puts?
  4. MTE


    Sure it can be done. Anything is possible.

    I know a guy who's been writing options for a decade and never had a losing year.

    However, it is not as simple as it may look, as all other trading strategies it requires great discipline and planning, no exceptions.

    By the way, if you don't have the guts to write naked options you can always sell verticals. Less profit potential, but the risk is much smaller.
  5. omcate


  6. Yes, Ansbacher does it. His return is between 19-25%. In order to make a decent living, you have to have about 300k-400K to live on this return.

    Does anyone think it is possible to make more than 20%? writing naked options?
  7. range


    I am not an option expert, but writing naked options when VIX is trading at lows not seen since 1994 seems like you would be getting little return for the risk you would assume.
  8. Xenia


    VIX is only for stock indices.

    There are many many other markets out there.
  9. One can make about 40% on average per year. You need
    1/ Liquid market
    2/ Premium worth of the risk
    3/Stops in place (works only in liquid market)
    4/Must know a decent reversal timing method.

    Good luck
  10. just21


    Trade markets that have SPAN margin instead of reg T. Don't use all your margin so that you can turn naked position into covered call/put if strike is hit. Sell options two standard deviations of the historic volatility away to give yourself odds of 19/20 of not being exercised. Write to IB and tell them to get on with testing IPE options.
    #10     Jul 28, 2005