Comments
PMmeGRILLEDCHEESES t1_iy3hxoa wrote
think of the premium sold as his revenue, and think of the 70,618 as his cost of revenue. the net amount is his gross profit, then you take out fees and commissions and you get a profit. the chart does ignore taxes so their net profit is somewhere lower than the 18,362 shown here
S-WordoftheMorning t1_iy3iigx wrote
Selling options only requires that the losing bets don't underperform the premium you collected by selling the option.
Example: I decide to sell weekly call options on GM with a strike price of $15.00. I sell the option at $1 a share. One contract is typically 100 shares. So, if I sell one contract I collect $100 dollars in premium.
If the price of GM closes at or below $15 then the value of the call option is $0.00, and I get to keep the $100 in premium (minus trading commissions & fees) I collected.
If GM closes above $15, the buyer of the call option will exercise their right and I have to either buy back the call option, or sell 100 shares of GM at $15. If the price of GM stock closes at $16, then it would cost me $100 to buy back the option or sell the 100 shares at $15.
If the price of GM goes above $16, now every penny I collected in premium is wiped out and now I have to dip into my own pocket to cover the trade.
The chart says they made $18,362 in profit, which means (accounting for commissions & fees) of the original $92,100 in options contracts they sold, the seller's equity decreased enough that it cost them everything but $18,362 to cover the trades or meet their obligations to sell the underlying stock to the buyer.
ShallowNefariousness OP t1_iy39rcb wrote
Source: data straight from my brokerage account.
Tools: Google Sheets to compile the data.
Visual created with Sankey in Figma
I have 3 core strategies I deploy on a mostly daily basis. I sell options with the expectation that not all will win. It is a numbers game and the more days I am in the market the more the statistics play out in my favor. I was able to capture nearly 20% of the premium I sold in October which is a little higher than the typical month. My expected capture rate is around 10-15%. In October I had 176 individual trades with a win rate of roughly 72%.
vanmichel t1_iy3hcdc wrote
Do you close out of every position daily? How many contracts are you typically selling in a day (to get an idea of the size of your portfolio)?
ShallowNefariousness OP t1_iy3o8bc wrote
I do some 0DTE so for that strategy everything is closed or settled by the end of the day.
AramisFR t1_iy3ekw0 wrote
Looks like a creative way to advertise for the use of these gambling platforms
Efficient-Radish8243 t1_iy3fj9b wrote
It’s only a good advert if someone has 150k spare and enough knowledge about this to make it work
trippd6 t1_iy3fnxx wrote
I did this before. When done correctly options are not gambling. He is effectively providing liquidity. In some ways selling options to the gamblers.
Options are very complicated. I took a lot of training and did what this guy does. It wasn’t for me, but if done correctly, like this guy is doing, is very safe, and low risk. All the risk is limited through hedges that limit losses.
Over time selling options like this will make money. A bad day may wipe out a month or more of gains. But that’s a rare event, expected but rare. Over time you will make money.
AramisFR t1_iy3ghfl wrote
Sure. You make money out of thin air and obviously no one in the banking sector is doing exactly the same, times 5000, and also with automation and extremely low latency.
Me look curve going up, me BUY, me win money.
I don't know how it is regulated in the US, but in the EU, brokers for Forex, option trading, and similar products targeting retail investors have been forced to provide data about performance for a few years. Almost 90% of accounts are in the red, consistently.
The only one consistently winning is the broker.
trippd6 t1_iy3ic1q wrote
What you’re missing is someone sells the options to the guys at wallstreetbets. Those guys loose because they buy options. This guy is selling to them. They loose most of the time. This guy is the winner. Also this guys losses are limited. Those guys losses are not.
As someone else posted in reply, buying options is gambling. Selling is not. Well it is if not hedged. If hedged, he’s the bookie. He’s selling to the gamblers.
danielv123 t1_iy3n0os wrote
It's like selling a spy 275p. Sure, it has almost no value, but it also has basically no risk. You'd be an idiot to buy one, but the 1c you get from selling it is a consistent win.
trippd6 t1_iy3qbv5 wrote
Eh, bad example.
A better example is selling the call and buying a put and 250. You most likely won’t loose and when you do your losses are limited. That is why you can sell them safely. You know how much you loose if the price goes to zero. Because your loss is limited and it’s rare, you will make money.
The only way this doesn’t work is if the market goes up and down repeatedly very quickly. That won’t happen (because it will just go down and we are all hosed)
PeKaYking t1_iy3ifvt wrote
Obviously you've never heard of firms such as Optiver, IMC etc.
[deleted] t1_iy3h9sm wrote
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Effective_Hope_3071 t1_iy3ip7o wrote
Yeah he's doing the most risk adverse thing you can do with options lol
CinemaMakerSD t1_iy3g2l9 wrote
Buying options is gambling, selling is not
PortGlass t1_iy3ghko wrote
But he didn’t even tell you what brokerage he was using. He mentioned no product at all.
Effective_Hope_3071 t1_iy3e5q1 wrote
Have you tried turning the wheel and noticed any difference in performance vs always closing before expiry/expiring OTM?
Are you writing naked or all CSP/CC?
What is the lowest amount of capital you can see being lucrative with this strategy on SPY? I'd like to theta gang but it's a big boys game.
Do you only trade monthlies or a mix of DTE?
Do you write legs and diagonals or focus on one position?
That's a hell of a win rate in a turbulent market.
ShallowNefariousness OP t1_iy3nuk9 wrote
I do run the wheel from time to time just to switch things up but it's not a bread n butter strategy. I write a mix of strangles, iron condors, ratio spreads and butterflies mostly 0-1DTE as well as around 30-40DTE.
Effective_Hope_3071 t1_iy3qrwv wrote
Gotchyea, mostly delta neutral capturing IV and Theta. Takes discipline for sure.
StudioStudio t1_iy3eg36 wrote
I assume one strategy is covered calls, the other is CSPs and the third is condors?
ShallowNefariousness OP t1_iy3of7q wrote
Occasionally I wheel AAPL otherwise this is mostly iron condors, ratio spreads, vertical spreads and strangles
MegaRiceBall t1_iy3g78l wrote
No margin interest paid which means you have enough cash to cover.
I wonder what your average exposure was for October
w4ti t1_iy3c3uo wrote
How is the win rate so high when you have bought back so many contracts?
Effective_Hope_3071 t1_iy3d8oq wrote
He buys them back at a lower premium.
PatrickSebast t1_iy3doxx wrote
I don't know how he calculated it but it's a win if the premium + contract price was less than the gains that would have been made from holding the stock.
Like if you sell SPY $400 call contracts for $3.00 a piece and SPY goes up to $401 then you made money. It would have needed to go up to $403+ for holding SPY to be a better option.
PotentialFly1450 t1_iy3b4uw wrote
Nice. What country are you in and what brokerage do you use?
mountainmanstan92 t1_iy3fhl5 wrote
Not a trader, but isn't the profit plus premiums bought back minus the cost less than your initial 92k, doesn't this mean you lost money??
CinemaMakerSD t1_iy3gb1t wrote
No, he sold 92k worth of options, when you sell options you are credited that amount. So after buybacks and commissions the leftover is his profit, he didn’t spend 92k
mountainmanstan92 t1_iy3gf9o wrote
Ahh thank you for clarifying!
7Xes t1_iy3c3oi wrote
Nice, how did you get into that?
ShallowNefariousness OP t1_iy3ou1f wrote
I started investing with basic stocks and indexes. Options seems scary and inaccessible but with the proliferation and access of information over the last 5 years I simply started dabbling. There are a ton of great (FREE!) resources online. You don't have to pay for information and be cautious of anyone trying to sell a course or strategy to you
noob09 t1_iy5vjw5 wrote
Can you post a few resources to get someone pointed in the right direction?
Enough_Librarian3720 t1_iy3dfay wrote
Wasn’t this posted a few days ago?
ShallowNefariousness OP t1_iy3dor3 wrote
It was removed since it's personal data and that's only allowed on Mondays
caveyh96 t1_iy3ev8d wrote
Dumb question, what's an option?
digme12 t1_iy3fpt5 wrote
It's a contract to buy stocks at a fixed price forward looking into the future with a certain "guesswork". You make money be prognostication of the stock price to a forward looking date. highly lucrative and highly dangerous for loss potential
MalvernKid t1_iy3fy8q wrote
Wait, so you get to buy back the losing trades and keep the profit of your winning trades? How can you possibly lose?
ShallowNefariousness OP t1_iy3p3k4 wrote
By having a larger loss size to win size with a low enough win rate. Win rate is not the only important metric. Minimizing losses is key to long term success. At the end of the day it's risk management
S-WordoftheMorning t1_iy3j3n9 wrote
Selling options can be a loser if prices of the underlying stock moves up or down (depends on whether you sold call options or put options) beyond the strike price (agreed upon sale/purchase price for underlying stock) plus the premium per share.
hyperpigment26 t1_iy3g95q wrote
How much of the profits do you bank to other investments or savings?
Diligent-Road-6171 t1_iy3i2jf wrote
What do you use as a brokerage?
Do you have any other details on the strategy?
arisylafeta t1_iy3id4b wrote
If you’re selling naked puts please make sure to factor in a black swan event in the coming months. We’re in volatile times and considering how companies are getting bankrupt left and right, there’s a chance that a market structure might fail.
De3NA t1_iy3jinu wrote
How large is your portfolio? What’s the difference between this and going long vs shorting
NattyLightLover t1_iy3l6rf wrote
Options have a lower delta than stocks so they move less (dollar basis) when the stock makes a move, but they are leveraged so it costs less and thus move more (percentage basis).
If you hold a call you bought through expiration, you will buy 100 shares at the strike price of that option. If you have sold a call to open(short) and hold it through expiration, you will be assigned 100 short shares at the strike price.
If you hold a put your bought through expiration, you will be short 100 shares at the strike price. If you sell to open a put and hold it though expiration, you will be assigned 100 shares at the strike price.
With a short call and a short put, because you sold them, if your option gets assigned you still keep the premium.
De3NA t1_iy3ohko wrote
So they’re playing IV? That’s why they have this return? Trying to dissect this
NattyLightLover t1_iy3olvv wrote
IV or Theta
galacticspark t1_iy3k7bl wrote
Great post, OP, thanks!
Were these call or put options?
ShallowNefariousness OP t1_iy3p7km wrote
This is mostly iron condors, ratio spreads, vertical spreads and strangles
Nilfy t1_iy3m6c0 wrote
How do you decide when to sell off a losing trade?
ShallowNefariousness OP t1_iy3pfuv wrote
The decision when to close a trade is made before I execute it. Every trade should have a plan, when you will take profit or if you plan to let it run to expiry and most importantly when it goes against you when to cut the losses and live to trade another day
autistictheory t1_iy3pr4m wrote
OP, join us over at r/thetagang you will be appreciated here
u_PM_me_nihilism t1_iy45h1k wrote
How many hours a day do you spend on this, between research, tracking, and executing trades?
ShallowNefariousness OP t1_iy4bl1b wrote
When I trade 0DTE I will be in front of the computer during trading hours to ensure I'm out of trades as quickly as possible when they go against me. The trade execution takes little time. The rest of those days is research and talking shit with other traders. When not trading 0DTE I can do the execution from my phone and only spend a few minutes logging trades later in the day.
iamthemosin t1_iy3hktl wrote
This doesn’t make any sense. How is there $18k profit with a starting capital of $92k and losses/fees of $73k?
MarkVarga t1_iy3og6j wrote
His income is 92k, his cost of revenue is 73k and the difference is the profit basically. When you sell options, you get credit.
Effective_Hope_3071 t1_iy3j11y wrote
Because he's selling not buying. He begins at a starting gain of 92K by selling 92K worth of premium and then "loses" 73K when buying to close his positions. Therefore 18K profit. He bought his contracts back for less than what he originally sold them for.
mushroompig t1_iy3af6y wrote
What's it like having a pointless job that creates nothing of any tangible value for anyone?
Zachincool t1_iy3bwne wrote
He’s providing liquidity for financial markets. Instead of yelling at the small time trader, go yell at hedge funds buddy
Zachjsrf t1_iy3bzqc wrote
Wow, imagine hating on someone for making a living the best way they know how
Simbertold t1_iy3cm3h wrote
It is not really about hate, and more about sadness.
Imagine if all the people who do pointless bullshit like this were doing stuff that actually benefits society. OP could have been an engineer, a scientist, a nurse, a teacher, a doctor, a dogwalker, a prostitute, a construction worker,...
Instead they are playing a pointless negative-sum game with the goal of winning at it. Because that is rewarded more by our system than doing useful work.
This is basically like professional poker, but even more stupid.
So many people are wasting their lives doing this pointless shit that doesn't help anyone in any way.
Zachjsrf t1_iy3cvu0 wrote
Not everyone is able to do all those things, I work in Construction but if I could trade full time like OP I certainly would, society doesn't care about those who contribute anymore and OP still does more than most people do. The real problem isn't what OP does to eat the issue is that the system has been in place for over a century and the people in charge like it that way, instead of railing against it and screaming about how "bad" it is OP and many other including myself are trying to look after ourselves and those we care about
Simbertold t1_iy3d8ss wrote
Not everyone is able to do all of those things, but everyone is able to do something useful.
And yeah, i agree that it is a core problem that people who play pointless games get rewarded more than people who do real work.
Zachjsrf t1_iy3dcd0 wrote
One thing I've found as I've advanced in my career, the less work I've done as I've advanced the more I make, that's the system, that's the reality, gotta work with what we've got
Zachincool t1_iy3gos8 wrote
I fucking love capitalism. I love the fact that I can work hard in construction and make enough money that I can choose to invest or gamble it in financial markets and grow my wealth exponentially. I love being able to consciously take on risk and choose my own destiny, rather than being born and boxed into an income cap and not be able to change my life ever.
The fact that you find this "sad" is messed up and sad in itself.
ProFoxxxx t1_iy3cwxz wrote
Options are usually used to hedge investments. Investments create all the jobs for the engineers and scientists etc that you mention that benefit society
[deleted] t1_iy3hw19 wrote
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WR810 t1_iy3e7nd wrote
> Imagine if all the people who do pointless bullshit like this were doing stuff that actually benefits society. OP could have been an engineer, a scientist, a nurse, a teacher, a doctor, a dogwalker, a prostitute, a construction worker
This makes a problematic declaration. Not only does it remove the original poster's right to self determination (what if he doesn't want to fit inside the box you constructed?) but it assumes that only things that "benefit" others in a specific way are acceptable.
iproblyrong t1_iy3epr4 wrote
Interesting take from someone wasting so much time complaining on Reddit. Spreading your negative energy is worse than a human freely choosing their path in life.
CoysNizl3 t1_iy3d47g wrote
Options are hedging instruments. He is providing a service. Just because you’re midcurve and don’t understand the value of options doesn’t mean that he isn’t doing something “of value”.
griwulf t1_iy3dlsk wrote
First time I see midcurve used to insult someone lol
Effective_Hope_3071 t1_iy3ehye wrote
We can all agree that financial derivatives get muddier and muddier, and maybe some do exist solely to intimidate the layperson unwilling to learn into hiring an active manager, gross.
Essentially don't hate the player, hate the game. But you gotta play to score.
Diligent-Road-6171 t1_iy3hvdx wrote
Risk transfer isn't a negative sum game...
autistictheory t1_iy3nmkq wrote
is something useful just because you say it is?
What if I said national sports teams is pointless and all the athletes should do something "useful" like building bridges and infrastructure.
or acting and movies are pointless because its just entertainment they should be farming and generating crops to feed people instead.
It wouldn't matter because even if 1 person enjoyed watching sports and movies then there would be a market for it, and there will be people to provide it if they can generate revenue from it.
In a similar way, even if the whole world thought options were useles, if there was even one person in the whole world who found value in purchasing a contract then the option has value.
Simbertold t1_iy3v1gz wrote
My core definition would be that if your main job is making sure that you (or someone else) gets a bigger part of the pie without increasing the pie, then your job is pointless. Basically, goon jobs. Tradionally that would mean beating people up, nowadays we have financial traders and lawyers who do stuff like that.
Edit: In your examples, the people produce something useful. Athletes and actors provide fun for other people. That fun wouldn't exist if the job wouldn't be done.
The options trader does not produce anything, they just try to make their part of the pie bigger at the cost of other people.
autistictheory t1_iy3yfmx wrote
options are generally used as a hedge against their investment holdings. just because you don't think it has value doesn't mean there aren't other people who value that.
The fact that OP made profits on this venture is just proving exactly the same thing as what you say about athletes and actors. There are people paying for the service of purchasing options contracts and thats all that needs to be said.
orangeminer t1_iy3cw42 wrote
Tell me you don't understand how financial markets work without telling me you don't undertand how financial markets work.
ProFoxxxx t1_iy3bd6a wrote
Loss porn is tangible value
sohu86 t1_iy3ej6s wrote
Option sellers provide an incredibly important value for the derivatives market. Sorry you don't understand it yet.
mushroompig t1_iye0ff2 wrote
I do. I just dont like it.
sohu86 t1_iye3u7k wrote
Why don't you like it?
DirkHellbender1337 t1_iy3fd2s wrote
Whats it like being this salty over someone making more money than you?
mushroompig t1_iye0qqr wrote
Honestly? Really tiring. But that might just be the being poor part rather than the saltyness.
autistictheory t1_iy3nzjn wrote
It actually feels really fucking good lmfao
Jaded_Prompt_15 t1_iy3c0jn wrote
In all likelihood the post is made up and their "real job" is selling "seminars" to idiots who think they too can make 18k a month, but they need to attend the special online seminar for only $99.99!
[deleted] t1_iy3d2jv wrote
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[deleted] t1_iy3al3v wrote
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mrbuhtkis t1_iy3bu2t wrote
I smell jealousy
WR810 t1_iy3ejl1 wrote
How is it stealing when he enters into contracts with willing participants?
If OP gets on the wrong side of a trade does that mean the counter party stole from him?
[deleted] t1_iy3eqfc wrote
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maugust09 t1_iy3b6kg wrote
Capitalism at its finest baby 😎
indyK1ng t1_iy3fcrd wrote
What isn't clear to me is how much you made on the winning bets to actually cover the costs of the losing bets.