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How much can I earn with Options?
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How much can I earn with Options?

  #11 (permalink)
Elite Member
Vancouver, Canada
 
Futures Experience: Intermediate
Platform: Ninjatrader, Sierra Chart
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By your question I can tell you are pretty new to this and that is not a criticism, it's ok.

From hard lessons I have made and lost a fortune on them. They are very nuanced instruments and you cannot just hold them as you do a stock or future. They are leveraged instruments and decay and volatility are important characteristics you must understand. If you just trade long put or long call you have very little margin to be right in terms of direction. Because they are leveraged, losses grow exponentially once the underlying goes against you. With income selling strategies you have more leeway but still you need to know advantages and disadvantages as well as understand the underlying asset.

I highly recommend virtual trading on CBOE's virtual trading page. It is free to register and you can trade both stock options and futures options on it.

https://www.cboe.com/trading-tools/virtual-trading-tools/virtual-trade

One thing beginners don't realize is that besides financial capital, psychological/emotional capital is a critical asset. If you take too many losses or take losses that are too big your psychological capital goes down exponentially. Some people never recover from that. I know people who finally gave up on trading.

So protect your psychological as well as financial capital by using that virtual trading tool and trading with appropriate risk for your account. If you are trading because you need to pay the rent, you have already lost because you will be too focused on outcome and not process. It's a cycle I see some of my friends in and they don't understand why they cannot solve the problems with their trading.

Don't try to hit home runs. Trading is a marathon and what you want is to consistently hit singles and to stay in the game for a long time.

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  #12 (permalink)
Elite Member
Dallas, Texas
 
Futures Experience: Intermediate
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myrrdin View Post
Always remember:

You will compete against the best professional traders, having large experience and best possible education. They have all fundamental knowlegde available almost in real time, and can use the best computers.

Imagine any other profession you have not studied. Perhaps Medical Doctor or Rocket Scientist or Chemical Researcher. Would you feel to be ready to compete against the best of them in their field of expertise ?

I am always surprized how many people think they can make a lot of money in trading without being at the level of their competition.

Best regards, Myrrdin

Yeah that's not really how trading options works. It doesn't matter who is on the other side of the put or call if it is part of a long term plan. Don't fall into a mindset that someone or invest bank/HF is competing against you because that's just not the case for the majority of private investors/trader. They could care less.

Make a long term plan and use options as vehicle to help maximize returns. Keep it simple, such as just selling puts on equities that you want to own or if trade ES/ options make sure that fits into your view of the overall market .

Day trading options is a recipe for disaster, you might as well go to casino and have some fun gambling. Same way with day trading futures in my opinion. I have found that 25-60 days as the sweet spot for most options I trade and the trades I do take fit into my overall view of the market

Btw trading illiquid options, being overleveraged (Ron99) or controlling most of the contracts at a certain strike price is the fastest way to lose you money. Don't believe everything you read on some of these threads. A lot good advice on here and good site to learn.

Volatility is good for the market and trading.

Preservation of capital is the most important concept for those who want to stay in the trading game for the long haul. - Van Tharp
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  #13 (permalink)
Elite Member
Dallas, Texas
 
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Favorite Futures: AAPL, /ES, IWM, SPY Options
 
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NGtrader View Post
By your question I can tell you are pretty new to this and that is not a criticism, it's ok.

From hard lessons I have made and lost a fortune on them. They are very nuanced instruments and you cannot just hold them as you do a stock or future. They are leveraged instruments and decay and volatility are important characteristics you must understand. If you just trade long put or long call you have very little margin to be right in terms of direction. Because they are leveraged, losses grow exponentially once the underlying goes against you. With income selling strategies you have more leeway but still you need to know advantages and disadvantages as well as understand the underlying asset.

I highly recommend virtual trading on CBOE's virtual trading page. It is free to register and you can trade both stock options and futures options on it.

https://www.cboe.com/trading-tools/virtual-trading-tools/virtual-trade

One thing beginners don't realize is that besides financial capital, psychological/emotional capital is a critical asset. If you take too many losses or take losses that are too big your psychological capital goes down exponentially. Some people never recover from that. I know people who finally gave up on trading.

So protect your psychological as well as financial capital by using that virtual trading tool and trading with appropriate risk for your account. If you are trading because you need to pay the rent, you have already lost because you will be too focused on outcome and not process. It's a cycle I see some of my friends in and they don't understand why they cannot solve the problems with their trading.

Don't try to hit home runs. Trading is a marathon and what you want is to consistently hit singles and to stay in the game for a long time.

Best advice someone could give a new trader

Volatility is good for the market and trading.

Preservation of capital is the most important concept for those who want to stay in the trading game for the long haul. - Van Tharp
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  #14 (permalink)
Market Wizard
Cleveland Ohio/United States
 
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blb014 View Post
Yeah that's not really how trading options works. It doesn't matter who is on the other side of the put or call if it is part of a long term plan. Don't fall into a mindset that someone or invest bank/HF is competing against you because that's just not the case for the majority of private investors/trader. They could care less.

I think the point here was not the professionals are on the other side of any particular trade, but that the professionals are out there, and their job is to make lots of money. They don't care about any individual - they just care about making money.

Many retail traders treat trading like a pickup basketball game at the local YMCA, not realizing that LeBron and Kevin Durant might be playing (and might not be on your team).

So my take on @myrrdin comment "You will compete against the best professional traders, having large experience and best possible education. They have all fundamental knowledge available almost in real time, and can use the best computers." is that you really have to have your act together to have a chance at success.

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
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  #15 (permalink)
Market Wizard
Linz Austria
 
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kevinkdog View Post
I think the point here was not the professionals are on the other side of any particular trade, but that the professionals are out there, and their job is to make lots of money. They don't care about any individual - they just care about making money.

Many retail traders treat trading like a pickup basketball game at the local YMCA, not realizing that LeBron and Kevin Durant might be playing (and might not be on your team).

So my take on @myrrdin comment "You will compete against the best professional traders, having large experience and best possible education. They have all fundamental knowledge available almost in real time, and can use the best computers." is that you really have to have your act together to have a chance at success.

Never forget: The sum of all profits in trading of futures and options on futures is zero ! (minus fees ...)

Best regards, Myrrdin

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  #16 (permalink)
Elite Member
Dallas, Texas
 
Futures Experience: Intermediate
Platform: TOS
Favorite Futures: AAPL, /ES, IWM, SPY Options
 
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kevinkdog View Post
I think the point here was not the professionals are on the other side of any particular trade, but that the professionals are out there, and their job is to make lots of money. They don't care about any individual - they just care about making money.

Many retail traders treat trading like a pickup basketball game at the local YMCA, not realizing that LeBron and Kevin Durant might be playing (and might not be on your team).

So my take on @myrrdin comment "You will compete against the best professional traders, having large experience and best possible education. They have all fundamental knowledge available almost in real time, and can use the best computers." is that you really have to have your act together to have a chance at success.

I agree as far as retail day trading options. I think it is a waste of time and it is a flipping game at best. The daily ups and down with the countless variables, it almost impossible to apply any reasonable strategy on a daily basis.

But who really knows who is on the otherside of a contract, and what their motivation is for trading that option. IMO there is no boogeyman out to get you, it is all about the person's trading plan and goals. The market is much more complex, external factors and the underlying are most important not who is on the other side of a contract.

Volatility is good for the market and trading.

Preservation of capital is the most important concept for those who want to stay in the trading game for the long haul. - Van Tharp

Last edited by blb014; July 21st, 2017 at 04:12 PM.
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  #17 (permalink)
Elite Member
Dallas, Texas
 
Futures Experience: Intermediate
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Traderjohnsblog View Post
You make a good point. I am not sure how many lose money. A lot I am sure. My perception (obviously scewed) is from my own experience, friends and the people that I have trained.

Sent using the futures.io mobile app

Seem what I mean don't believe everything that is posted on here

Day term trading options is recipe for disaster. Use options as way to meet your long term trading and investment goals not short term gains

Volatility is good for the market and trading.

Preservation of capital is the most important concept for those who want to stay in the trading game for the long haul. - Van Tharp
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  #18 (permalink)
Silver bullet
Kassel / Germany
 
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nicholassdyer View Post
How much can I earn with Options?

this is a question one can read a lot regarding options, futures, forex, etc.
imho the question shouldn't be how much is possible, rather how much effort one is willing to learn and understand things in that context. Sounds boring but without much effort and the understanding of what one is doing the statement that as a trader one is competing against sharks on the other side will turn all the dreams of a big profit into a nightmare. It doesn't matter whether one is competing directly, indirectly, every possibility to have a small piece of the cake is getting exhausted by the other sharks. Just choosing options because people make big money there is not a good base, just choosing futures because one wants to play like a big player without understanding the rules will blow up the account someday.

There's a lot of documents around options on the internet and good threads here also. Beside all the valuable information the most important thing is to try to understand the things and not just copy them. I remember 2015 with lots of discussions on selling options and people trying to emphasize some major drawbacks on a possible market turn. Caramba, the crash came and people got silent ... very slowly reconsidereing their original trading-idea (which was "flawless" a while before) with the conclusion they were wrong but only beaten on one eye, not knocked out. I've seen this here, on reddit, tastytrade, etc, people turning it the way they want it to be not open for things outside their range of calculations, until the market is teaching that things can change and this can happen damn fast.

Knowing that things are never perfect and knowing that one was wrong during the last big crash in 2015 after rejecting all advises and contrary words, then risking the own existence thinking this time one is entirely in charge is something everyone has to consider for hisself. No big deal being wrong in stocks, regarding options on futures for example you can't be wrong that often, it would kill you. So just following the crowd and jumping on the hot-things without having your own understanding and your own adjustment for your risk you are willing to enter would be not the best start.

So learning about options you'll learn that it's possible to earn loads of money but the same applies for the other side. Imho the amount of money you can earn shouldn't matter at all. The risk-reward-ratio one is able to achieve constantly is more important. Selling options the premium can be sometimes depressing compared to trading futures, especially being way longer in the market than with trading intraday a future. People often forget about this. The shorter the time you are in the market risking your house, the less likely it will kill you.

So for me I decided to do my Fx and Future-trades and the money I put aside is used for selling options, instead of earning almost no interest on a bank. I forgot to make millions with options, regularly selling options with a nice return without risking my existence is better for me.

just my 2 cents

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  #19 (permalink)
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Nicely said. I completely agree.

Sent using the futures.io mobile app

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  #20 (permalink)
Trading Apprentice
Oakland, California
 
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If you've got a ton of money and can hire a bunch of sophisticated traders, you can earn a lot. If you're bootstrapping with some play money.... well, it'll take a while and I don't think you'll get the crazy 200%++ gains you see people throw around on the internet all the time.

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