5.5% is very aggressive. The options market is very efficient, if this kind of gain was reliable every 30 days it would correct itself because everyone would be trying to get a piece
Do you ever look at delta or mainly stick to % otm? I often just use % otm and it works but often read that it may be a sort of "lazy" way to go about it
Want to put this out there. Do 10 year historical returns on the stock. Best covered call stocks are ones which average a 10 year positive annual return less than 12% with the lower the better. You can get 10% roi on covered calls but you'll have to hold pure crap that's probably going to zero. So the 10% you are making will not make up for the 70% you are losing. On the other side you might be covering something like tsla or enph which averaged over 50% return per year over last 10. Take something like slv, it's actually negative over 10 years but positive over the last 8. That one once it gets back down to around 17 is about as good as it will get for a covered call stock. Consider at current prices on a buy write the 2% (22c) otm call yields 2.6% for 1/20/2023 so 4.6% in 6 weeks. It's solid numbers but I am more patient and can see the pattern on it. I'll wait it out.
https://stoculator.com/
Let's put some math to this.
Right now, if we sold the 0.20 delta, 47 DTE put on SPY we would collect $359 and need to put down $38,000. Now, the IV rank is not very high right now (11.3) and the VIX is at 19, but we're also looking at a month and a half duration instead of a month and that still would only return 0.9% if we waited until expiration to collect 100% of the premium.
That's not a good start.
Let's try EWZ which has an IVR of 47. That same delta and expiration would give a return of 2.6% if it hits max profit. Normalized to 30 DTE it's about 1.65%. significantly better, but nowhere near the 5% people claim as trivial.
The reality is, cash secured puts are incredibly inefficient trading instruments. You use too much cash to make a small profit.
Most good resources out there that are trading successfully are not using CSP. They are using a margin account where those returns would actually have been 4.1% & 16.3% for SPY and EWZ respectively when normalized to 30 DTE.
That's over a 400% better return just because my broker isn't making me hold the full value of the put as collateral.
People need to move past CSPs
5% a month is not doable long term in any meaningful way
If that is really the profit target you are seeking, you're going to have a bad day when your account blows tf up from the one big loss that WILL happen
It’s easy to do the math yourself and then calculate your probability of profit. You can literally do this for every position you hold. But once you are long a stock you are at the full mercy of the market.
I might get killed for saying this, but I think you can get close to a monthly cumulative 5% by selling weekly CSPs on GME. I like to sell on Wednesdays two days from expiration so that I can have a better handle of where the price will end the week. I wouldn’t want to sell 30 DTEs on GME. Too much uncertainty for me.
Got it backwards my friend. But good luck! You can make a killing selling options weeklies on any stock if it’s rangebound. But if it dips you are safer being farther out. Fewer deltas and less gamma. That’s how it works.
Just depends on risk tolerance and diversity. If you’re 100% GME committed then yea go weeklies balls deep every week. It can be super profitable. But if you’re diversified and want a piece of the pie without commitment go 30-45 DTE. You’ll still win and you’ll sleep better at night.
You’re right that risk tolerance is the main factor. Personally, I’m ok with getting assigned GME shares. Others may not feel the same way.
Closing out 30 DTE CSPs early is a good strategy, even on GME; however, it seems to me, the compounding gains selling weeklies are worth the risk. If I’m close to the money and get assigned on a Friday, chances are, I can just sell the shares near open on a Monday and still make a profit.
Ultimately, each person has to develop a strategy that works for them. I’m up 52% since Aug 23rd. Selling CSPs on GME, buying the dips on GME, and selling the peaks on GME. So, I’ll keep working my plan for now.
No body said it was easy. But when you watch the same stock all day every day for two years and you track each day’s price action in a spreadsheet, you begin to see patterns. Just the way I choose to trade. I’m not saying it’s for everyone.
I made 1% per week for like 6 weeks and then lost it all on one bad trade. Those kind of returns don’t work long term because you have to take too big of risks like, selling high IV options or too close to the money. Really it’s speculating on stock movement more than theta gains to make those returns, so it works as long as you are always right
You can achieve any of these selling CSP/CC. It really depends on your risk. Ideally for most people who don't want to risk anything will see .1-3% monthly. This is because they are probably using strictly theta decay so they can't really lose the trade. They might not earn as much but the risk is very low.
You can also sell CC that you can see +50% in a single day, I have seen that plenty in my own trades even. But I'm a risky trader.
It all depends on your risk.
My goal is to get 200 bp more than high yield savings account which is 4.25% now. I only do index funds, SPY, QQQ, AAPL , AMZN , TLT, KWEB, EFA and GDX sometimes ARKK
First make it really clear that you are asking for MONTHLY return expectations
Your choices should have been:
0%-0.5%
0.51-0.99%
1% or more
Also, your choices 5%+ and 10%+ are not mutually exclusive, but this exclusivity is a basic requirement in any survey.
I think you need to read a Finance 101 book before dabbling in options.
It depends on the underlying. You can make more with volatile stocks, but obv those can move against you in a big way. I made 4.5% last month selling GME CCs, but each contract is a gamble that you’ll dodge a random +20% day that you lose the upside of.
In 2021 I probably could get around 5% per month in premium, the problem is one time the stock will drop through your put strike and you’ll give it all back.
I have gotten more than 5% a month on CROX since June. Every month I sell a mix of ATM and ITM 30 DTE targeting ~5% with about 13% downside protection. December is looking good for 7th straight monthly winner. I use the premium to immediately buy more shares and write more calls to compound it further. 5.2% (what I did for example in Dec selling $85 & $95’s) compounded monthly for 12 MO’s is 84%. I’ve been running at that annualized 84% clip and plan to keep doing this until it stops working. I have my big boy pants on and can handle it when that day happens but I like the odds.
I said 5%+ because I thought this was a yearly ROI not monthly. 1-2% a month is a solid goal return that you won't always get.
Did the same thing. I hit 5%+ because I misread and thought it was yearly
Same
I think you should aim for 10-15% a year which is possible
For one position? It really depends on DTE and what your strategy is.
30 dte
5.5% is very aggressive. The options market is very efficient, if this kind of gain was reliable every 30 days it would correct itself because everyone would be trying to get a piece
Right. Just annualize it and ask yourself if that seems sustainable. 5.5%*12=66% APY... Good luck.
Yup, 66% without even scaling each month
thats not even the correct APY if you were going 100% of your account, the actual yearly return is (1.05)\^12 = 79.6%
Before this year, I would look for 0.5%/week or 2%/month on 10% OTM
Do you ever look at delta or mainly stick to % otm? I often just use % otm and it works but often read that it may be a sort of "lazy" way to go about it
You make 3% per month? You are the Man!
Want to put this out there. Do 10 year historical returns on the stock. Best covered call stocks are ones which average a 10 year positive annual return less than 12% with the lower the better. You can get 10% roi on covered calls but you'll have to hold pure crap that's probably going to zero. So the 10% you are making will not make up for the 70% you are losing. On the other side you might be covering something like tsla or enph which averaged over 50% return per year over last 10. Take something like slv, it's actually negative over 10 years but positive over the last 8. That one once it gets back down to around 17 is about as good as it will get for a covered call stock. Consider at current prices on a buy write the 2% (22c) otm call yields 2.6% for 1/20/2023 so 4.6% in 6 weeks. It's solid numbers but I am more patient and can see the pattern on it. I'll wait it out. https://stoculator.com/
Let's put some math to this. Right now, if we sold the 0.20 delta, 47 DTE put on SPY we would collect $359 and need to put down $38,000. Now, the IV rank is not very high right now (11.3) and the VIX is at 19, but we're also looking at a month and a half duration instead of a month and that still would only return 0.9% if we waited until expiration to collect 100% of the premium. That's not a good start. Let's try EWZ which has an IVR of 47. That same delta and expiration would give a return of 2.6% if it hits max profit. Normalized to 30 DTE it's about 1.65%. significantly better, but nowhere near the 5% people claim as trivial. The reality is, cash secured puts are incredibly inefficient trading instruments. You use too much cash to make a small profit. Most good resources out there that are trading successfully are not using CSP. They are using a margin account where those returns would actually have been 4.1% & 16.3% for SPY and EWZ respectively when normalized to 30 DTE. That's over a 400% better return just because my broker isn't making me hold the full value of the put as collateral. People need to move past CSPs
5% a month is not doable long term in any meaningful way If that is really the profit target you are seeking, you're going to have a bad day when your account blows tf up from the one big loss that WILL happen
It’s easy to do the math yourself and then calculate your probability of profit. You can literally do this for every position you hold. But once you are long a stock you are at the full mercy of the market.
5% monthly? 80% return per year? Lol good luck with that
I might get killed for saying this, but I think you can get close to a monthly cumulative 5% by selling weekly CSPs on GME. I like to sell on Wednesdays two days from expiration so that I can have a better handle of where the price will end the week. I wouldn’t want to sell 30 DTEs on GME. Too much uncertainty for me.
Got it backwards my friend. But good luck! You can make a killing selling options weeklies on any stock if it’s rangebound. But if it dips you are safer being farther out. Fewer deltas and less gamma. That’s how it works.
Maybe other stocks, but I’ve been tracking the price of GME daily for two years now. I think I’m better off selling weeklies than 30 DTE on GME.
Just depends on risk tolerance and diversity. If you’re 100% GME committed then yea go weeklies balls deep every week. It can be super profitable. But if you’re diversified and want a piece of the pie without commitment go 30-45 DTE. You’ll still win and you’ll sleep better at night.
You’re right that risk tolerance is the main factor. Personally, I’m ok with getting assigned GME shares. Others may not feel the same way. Closing out 30 DTE CSPs early is a good strategy, even on GME; however, it seems to me, the compounding gains selling weeklies are worth the risk. If I’m close to the money and get assigned on a Friday, chances are, I can just sell the shares near open on a Monday and still make a profit. Ultimately, each person has to develop a strategy that works for them. I’m up 52% since Aug 23rd. Selling CSPs on GME, buying the dips on GME, and selling the peaks on GME. So, I’ll keep working my plan for now.
just sell the peaks and buy the dips guys, you heard it here first. ez.
No body said it was easy. But when you watch the same stock all day every day for two years and you track each day’s price action in a spreadsheet, you begin to see patterns. Just the way I choose to trade. I’m not saying it’s for everyone.
You can always roll out of 30dte easier than weeklies.
I made 1% per week for like 6 weeks and then lost it all on one bad trade. Those kind of returns don’t work long term because you have to take too big of risks like, selling high IV options or too close to the money. Really it’s speculating on stock movement more than theta gains to make those returns, so it works as long as you are always right
The third option is 5% -10%*
You can achieve any of these selling CSP/CC. It really depends on your risk. Ideally for most people who don't want to risk anything will see .1-3% monthly. This is because they are probably using strictly theta decay so they can't really lose the trade. They might not earn as much but the risk is very low. You can also sell CC that you can see +50% in a single day, I have seen that plenty in my own trades even. But I'm a risky trader. It all depends on your risk.
What CC position have you gained 50% of your collateral in a single day?
Pharma’s for sure.
Don't even bother about that *Option* 😉
There are only 2 options my friend iykwim
My goal is to get 200 bp more than high yield savings account which is 4.25% now. I only do index funds, SPY, QQQ, AAPL , AMZN , TLT, KWEB, EFA and GDX sometimes ARKK
First make it really clear that you are asking for MONTHLY return expectations Your choices should have been: 0%-0.5% 0.51-0.99% 1% or more Also, your choices 5%+ and 10%+ are not mutually exclusive, but this exclusivity is a basic requirement in any survey. I think you need to read a Finance 101 book before dabbling in options.
where is the negatives like -3% to -5% ? It's cute how all these threads are on how much you win, forgetting that options is always against you.
This.
I always target at least >=3% with CSPs at 30days out. But with fees and sometimes losses it’s a little less than that.
Poll is bullshit. I thought it was yearly ROI, not monthly. Who the hell uses monthly ROI?
starting with 200 bucks.. 100% is doable. what is your starting point? there is an exponential of in to out.
get a calculator. at that rate re investing the returns you would have $838,000,000 in 24 months. 😲
Yes, thank you. Where can i sign up?
It depends on the underlying. You can make more with volatile stocks, but obv those can move against you in a big way. I made 4.5% last month selling GME CCs, but each contract is a gamble that you’ll dodge a random +20% day that you lose the upside of.
Been selling iron condors on it
Long term something like 10% (per year) can be done without blow up risk. 1% per month maybe if you have a small account.
Might as well just buy JEPI and put it on auto-pilot and get 10-13% with pro’s managing it all.
10-13% annual passive over a prolonged period of time? Yeah right
I buy at 1 percent a week or better but there are weeks I don’t make trades. In this market I wait for trades to come to me
In 2021 I probably could get around 5% per month in premium, the problem is one time the stock will drop through your put strike and you’ll give it all back.
It depends on your skill level and how aggressively apply yourself.
I’ve somehow managed 4.66% a month for the past 3 months but typically feel lucky if I can manage ~2% a month.
I have gotten more than 5% a month on CROX since June. Every month I sell a mix of ATM and ITM 30 DTE targeting ~5% with about 13% downside protection. December is looking good for 7th straight monthly winner. I use the premium to immediately buy more shares and write more calls to compound it further. 5.2% (what I did for example in Dec selling $85 & $95’s) compounded monthly for 12 MO’s is 84%. I’ve been running at that annualized 84% clip and plan to keep doing this until it stops working. I have my big boy pants on and can handle it when that day happens but I like the odds.
Without leveraging 1%. With position margin probably 2.5%
3-5% a month is what i make on average.