Ron - I am sorry to hear of your loss, my deepest sympathies to you.
I didn't start until March/April last year and did next to nothing in December so my 23% was over an eight month period. I had never sold options before and was learning on the job. Plus I had to deal with IB's high margins. This meant I was going for highish returns while still staying as far OTM as possible.
There was only one position where I was too close and was forced to close out for a loss. My positions were more aggressive than Ron's but I don't think they were risky either. I have documented several of my trades on this thread so search through and look at them for more details.
One thing I have noticed is that premiums seem lower at the moment, I put that down to lower volatility in general.
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That's amazing britkid99, man can you explain something to me with your high returns you out beat almost all major hedge funds and you were at a disadvantage with the high margins, I can't wait to start, you said you were more aggressive than Ron can you give an example I like crude cause I grew up in the middle east, did you sell with higher delta?
You are probably correct britkid99 that premiums are lower now because there has been very little volatility the past 2 months in most markets. But this quiet period will not last, the equities markets appear to be getting tired and is stalling at current levels.
Making a 25% annual return selling options on futures is not unusual at all. And it does not even have to be risky to do so. There has been years where I was fortunate enough to double my account in 8-10 months (no withdrawals, just let the account grow) simply by selling far OTM options that had a delta of 0.20 or less, which is what Cordier advises in his book.
I am not as conservative as Ron99 but he has convinced me that my success rate can be even higher if I choose strikes farther away than I have been selecting.
It all comes down to discipline and your tolerance for risk vs reward. Selling strikes closer to the money, the chances of a small move causing your premium to double or even send your strike into the money increases dramatically. Your margin requirements will also increase. The most frustrating thing that can happen selling options is that you get a margin call, be forced to exit a position at a hefty loss only to see the options expire worthless several weeks or a month later. Following Ron99's advice of having 66% of your account in cash to weather the storm is essential.
Last edited by MJ888; January 30th, 2013 at 02:35 PM.
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Here is a quote of my first trade posted here and also Ron's very informative reply.
I was going for deltas in the region o 05-10. I would now be unlikey to go above 05
I am nothing special still just a beginner BUT it is not that difficult and there is good advice and support available here.
ps: No bets from me on football (soccer) 50:50, you get better odds selling options