What is a sucesssful rate of return for an options trader.

Submitted by Aimadness t3_124al2j in wallstreetbets

To all the successful options traders what is the measure to be considered an above average trader? I have been trading for 3 years. I spent 2 years getting destroyed, a lot. Somehow adapted and now I am having some sucess. I feel like a king. I really have no idea of what above average results look like. I am interested in someone starting off with 500 to 1000. I did this 3 times. Currently I place 5-14 different strategies (?) a week.

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VisualMod t1_jdyjw8d wrote

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VisualMod t1_jdyjwql wrote

>There is no definitive answer to this question, as success in options trading depends on a variety of factors. However, some measures that could be used to gauge whether or not someone is an above average trader include the following:

-The percentage of successful trades relative to total trades made -The profitability of each trade on average -The ability to consistently generate profits over time

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Civil-Woodpecker8086 t1_jdym1jj wrote

What is your "Strategy"? I am a member of /r/Options and /r/Thetagang are you buying lotto tix or selling?

(I sell CC and CSP, my returns are pretty good)

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Wolf_of_Walmart t1_jdym7dq wrote

What kind of options are you trading? It’s all relative. If you’re strictly buying OTM puts and calls, you’re all but guaranteed to lose money over time.

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SeemoarAlpha t1_jdymvxw wrote

Consider this...no billionaires have ever been created by strictly trading options. Options are a tool to use as part of a larger financial strategy. The long term outcome of purely option trading ends in you fighting other degens for space next to a Wendy's dumpster.

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DYTTIGAF t1_jdyog7l wrote

It depends. Are you a day trader exclusively? Or can you see macro positions and trends. Are you a Micheal Burry type, or a bunny hoping from position to position.

My biggest trades this year: Southwest airlines after the Christmas screw up, SLV run up after one year beat down, and Nortfork Southern derailment.

It took me 25 years to see this trades develop. Now it's like looking at the obvious. Trade on osmosis.

Everybody has a different style. 500 trades a year, or only 10. Find your lane and crush it. Nobody really cares..so just get better each day. Enjoy the ride.

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Aimadness OP t1_jdyp8np wrote

Replying to DYTTIGAF (#2,408,798)

That’s awesome. I think I see it. I use available information to understand as best I can then find a way ,hopefully to extract value. It is an amazing puzzle. Even when I lose or miss I still enjoy the puzzle.

I don’t day trade. When I want to I get the warning and then wait until the appropriate amount of time. I would love to make and execute a trade every time is saw one.

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DYTTIGAF t1_jdyqepn wrote

Replying to Aimadness (#2,408,936)

Be patient. There's a hundred life changing trades every year. It's been that way since the early 1990's since I've been trading.

Keep building your skills. Enjoy the ride. It's a puzzle that's only available to the few who can "see the pieces".

You have a gift..most people don't have. Trust me.

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grimkhor t1_jdyqsla wrote

So let's put it like that. The most successful trading company ever lead by Jim Simons and a bunch of actually very very smart people could produce a reliable 50.75% win rate and made insane returns with that. Everyone else is extremely likely way worse. Don't ever think it's anything but a casino if you're trading.

Your best bet is actually finding some arbitrage opportunity in a niche which are the only "traders" that are actually successful and pray it never goes away.

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Aimadness OP t1_jdyrfli wrote

I lost 3 k bc I lost cell service for 6 min while going around a very small mountain.

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Wolf_of_Walmart t1_jdyt0lf wrote

Replying to Aimadness (#2,409,040)

An option can either be in the money (ITM) or out of the money (OTM) which refers to the strike price of the option in relation to the market price of the stock.

Naked refers to writing call options without owning the underlying or writing put options without being cash secured. Selling naked options exposes you to unlimited risk.

If you are buying options, they aren’t naked since your max loss is your premium.

If the options you buy have low premiums, they are likely OTM. Do you pay attention to Delta, Theta, Gamma, and Vega when you look at options? If you aren’t using the Greeks or looking at ITM/OTM, whatever run that you’re currently on is unsustainable.

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NotWhatYoureLookin44 t1_jdytcio wrote

Above average is when you can stop after 3 trades because the 4th one is always a loss, always.

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kongadongreturns t1_jdyu16h wrote

Replying to [deleted] (#2,408,696)

when you say "the rise in 0DTE contracts"

do you mean like "with 0DTEs becoming more popular..."? or do you mean "since 0DTEs are somewhat still a relatively new strategy that retail investors can use..."

I've only been trading em for 3 years and was under the impression ppl have been doing it longer than i

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grimkhor t1_jdyweu0 wrote

Replying to Aimadness (#2,409,807)

>As described by Zuckerman, Medallion’s strategy involved constantly opening and covering thousands of short-term positions, both long and short. According to Robert Mercer, one of Medallion’s key investment managers, Medallion was right on only about 50.75% of its trades. Nonetheless, he stated that taken over millions of trades that percentage allowed the firm to make billions. It is worth noting that engaging in millions of trades suggests that the transaction costs would be significant. The fact that the reported gross returns are after trading costs, makes Medallion’s performance even more extraordinary. It also implies that Renaissance was apparently particularly effective in minimizing such costs.

If you can actually reliable make 50.75% of your trades successful all it takes is making enough trades and reducing costs. The moral of the story is anyone who talks about a 50.80%+ success rate is lying to you. I would go even further and even say the ones talking about a 50%+ success rate are probably lying.

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SocraticGoats t1_jdyxiv6 wrote

I dunno, I think I usually get 5 cents for returning cans

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Diddlydodiddle t1_jdyy9mv wrote

I trade spxs weekly. I usually shift what contracts (and which way they go) at least once a week. Try to be out by the morning on Fridays. Think I’m on 7 weeks strait of profitability. I expect 40%-100% returns usually, but on the big fed days it’s been turning into 200%-400%. Very small account. Just trying to catch the trend changes and riding the waves. Almost no actual day trades. I pick the moves the day before and shift on the fly.

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aka0007 t1_jdyyh6d wrote

I would say, being down only 50% for the year makes you a successful options trader...

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bananabanker t1_jdz96uy wrote

>The salaries of Options Traders in the US range from $29,313 to $791,198 , with a median salary of $141,954

Sounds about right to me.

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DYTTIGAF t1_jdzbd3f wrote

Replying to expicell (#2,411,613)

The pilots union at Southwest was not backing down on the company mandate to receive the COVID vaccine. It was well researched and pretty simple thesis. The company needed humans to fly their planes and 60% of the pilots said..nope.

I just got lucky on the Christmas computer cancelation and delay fiasco that dovetailed into the position.

Rather be lucky than good.

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turry91 t1_jdzcpxt wrote

If you are green are better than average

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Sweet_Scar487 t1_jdzo9kx wrote

From experience and talking with friends, those committed to buying options generally have a return of -99.7%.

Those that sell options generally make a few % more than what the market returns

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grimkhor t1_jdzspra wrote

Replying to terrytibbs76 (#2,414,039)

That's buying the S&P 500 over the long term. Trading is about being successful on trades and scaling it with volume. If you trade to get the S&P 500 return stop trading brother and become a long term investor.

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grimkhor t1_jdztp5o wrote

Replying to terrytibbs76 (#2,414,114)

>The historical average yearly return of the S&P 500 is 10.326% over the last 20 years, as of the end of February 2023.
>
>The average annualized return since its inception in 1928 through Dec. 31, 2022, is 9.82%.

No problem here are the actual returns.

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tehs1mps0ns t1_jdzzr8t wrote

Well, hardyrekshin here on WSB claims a ~65% win rate with his daily wrinkle plays posted here. However backtesting his 0317 plays shows win rate closer to 40%. Still green overall at expiry, though so there we some big winners.

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DemocratLesbian t1_je0953s wrote

I started with 1k, dogecoin popping got me to 1.5k, Embraer got me to 7k, a mix mash of options got me to 18k, Activision got me to 8k before announcing Microsoft was going to purchase, got me to 42k in a morning. From there I thought I was a genius, pulled 20k out, lost 17k on Adobe, Ford, other options... Was down to about 4k in the pot at the beginning of this year, now I'm at 9.6k.

I'd never say I'm successful. With confidence. I'm up and was able to pull some money out. Successful? Yes, I didn't lose. Yet.

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CptInvestor t1_je0mdm9 wrote

Sucessful option trading? Is that possible?

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vice123 t1_je2ml4g wrote

Rate of return will vary greatly depending on your trade style and account size. I don't know what the benchmark is, but I personally consider 1% monthly growth to be very manageable with short options, not including any other income like dividends and interest on currency positions.

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Aimadness OP t1_je3219z wrote

Replying to S-U_2 (#2,417,118)

I am not that Sophisticated. This was one of the big moments where I knew I was good enough to find the value but I sucked at execution. I alllowed this pain to sink in deep. I continually reminded myself how I could have used that money or if I had it I could xyz, I used it as fuel. It took another 3-4 months before I could find or identify when I should contemplate exiting a trade, and to justify it with reason or logic or whatever. I still could not exit at the best time or anywhere close to it. I still lost but was no longer bleeding.

At this time I was deep in therapy for an injury that fucked me up. I went through CBT and it dramatically changed my life. I started taking care of myself and a year later things started changing and I started making better choices and was growing my ability to exercise discipline. Since then things have been better. Sure I may still suck but I’m making better decisions, using less money to make more consistently and love trying to find the value.

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9tacos t1_je338wr wrote

People actually make money doing this? I thought it was just to gamble img

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vegastrashy t1_je39403 wrote

The only sure one is breaking even. If your profiting, you are better than the average. Most fail.

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kongadongreturns t1_je3jz4a wrote

Replying to Aimadness (#2,434,215)

You got this! Here’s a pro tip- if you’re ever lost in the woods and looking for cell service…go to the top of the mountain and not around it. But don’t sweat it dude, some people probably have paid way more than $3,000 to learn that if you want to use the internet then you need the internet.

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vice123 t1_je4i276 wrote

Replying to Aimadness (#2,435,187)

Benchmark in the sense what is a common baseline to compare with, e.g. most people use the yearly average S&P500 returns, or maybe the ytd return. Some people are happy when they beat the SPX even if they are still in the red.

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