Returns

[NEWOP43]

If I am understanding correctly. If you want big returns you have to play big cash. So, question is this. is it common for a professional options trader to make investments in various options of 50k and more? What are the average investments that the big fish play with? Hope this question makes sense. If not chalk it up to my obvious lack of experience! Thanks!

 

[luckyd1976]

If I am understanding correctly. If you want big returns you have to play big cash. So, question is this. is it common for a professional options trader to make investments in various options of 50k and more? What are the average investments that the big fish play with? Hope this question makes sense. If not chalk it up to my obvious lack of experience! Thanks!

There's just no way to answer this question really. Big money is all relative of course.

But mostly it will depend on the individual money management techniques and strategies played.

Examples... far buyside OTM plays are cheaper than the Collar plays. Iron Condor Etfs are cheaper than Iron condor Futures etc.

I've seen 1mil+ accounts (85% Collars/10% Iron Condors/5% Cash or ShortTerm directional plays) to any number of different % combinations, money managements and styles. 1Mil (50% Collars/50% Market Nuetrals) All personal preferences according to ones own risk tolerances.

 

[NEWOP43]

I guess my question would be then...If I had say 20k sitting in my options portfolio. Would it be unreasonable (depending on my risk tolerence of course) to throw say 1k or above to how ever many options I felt like playing?

 

[Mathemagician]

I guess my question would be then...If I had say 20k sitting in my options portfolio. Would it be unreasonable (depending on my risk tolerence of course) to throw say 1k or above to how ever many options I felt like playing?

The reasonableness depends completely on your risk tolerance, which you already seem to know. That means you're probably just looking for reassurance, which you really shouldn't need. Do you have a written business plan that covers your trading? If you did (and you should) you would would know for sure if it suited your circumstances and goals.

jj

 

[NEWOP43]

also Lucky, how do a sift through the mountain of recommendation services out there? Trial and error? Do suggest a particular service?

 

[NEWOP43]

I don't have a business plan as of yet due to the fact that I will only be using a starting capital of 1k to start so I can determine if trading options is to risky for myself.

The reasonableness depends completely on your risk tolerance, which you already seem to know. That means you're probably just looking for reassurance, which you really shouldn't need. Do you have a written business plan that covers your trading? If you did (and you should) you would would know for sure if it suited your circumstances and goals.

jj

 

[Mathemagician]

You've got the cart before the horse, my friend.

jj

 

[Vrothdar]

I think he's just got a saddle myself.

also Lucky, how do a sift through the mountain of recommendation services out there? Trial and error? Do suggest a particular service?

Relying on the recommendations of others is a very poor way to trade imho. You need your own reasons for entering a trade when you do, risking the amount of capital you do and exiting when you do. A trade that is suitable for a tipster might not be suitable for you - It may be too risky, too volatile or too expensive to get into the market.

Then you've also got to consider why the person selling the recommendation is doing so: Do they genuinely know what they're doing or are they trying to make easy money?

 

[NEWOP43]

Thanks for all the feedback. So, I leave for now with one question. Would anyone have an opinion on what would be a good vehicle(not a very good driver yet) to learn to invest in? options, stocks, currency's etc. easy to learn and build upon?

 

[luckyd1976]

also Lucky, how do a sift through the mountain of recommendation services out there? Trial and error? Do suggest a particular service?

I dont reccommend the Newsletter route but IF YOU MUST

I would reccommend you google "Hulbert Interactive"

And if you do decide to go the Newsletter route. Stick to the stock pickers and make your own Options picks (Deep ITM, Far OTM, etc...) based on a really good stock picking newsletter. The options newsletters are far worse than the Stockpickers.

One of the more popular options advisor as an example...

-Annualized Comparable Returns

"Bernie Shaeffers Options Advisor"
-4.8% 20yr TR
-2.1% 10yr TR
-4.2% 5yr TR
-21.4% YTD TR

Compared to the S&P500
+17.8% 20yr TR
+2.5% 10yr TR
+5.56% 5yr TR
-13% YTD TR

 

[luckyd1976]

Thanks for all the feedback. So, I leave for now with one question. Would anyone have an opinion on what would be a good vehicle(not a very good driver yet) to learn to invest in? options, stocks, currency's etc. easy to learn and build upon?

I always reccommend people start with stocks. Learn alittle of both Fundamental and Technical analysis. Then move into something else if your confident in your skills.

 

[luckyd1976]

I guess my question would be then...If I had say 20k sitting in my options portfolio. Would it be unreasonable (depending on my risk tolerence of course) to throw say 1k or above to how ever many options I felt like playing?

Personal preferences.
Some believe you should only risk 1%-2% others believe 5%-10% risked per pick is enough diversification.

Google "Phillip Fisher" ONe of Warren Buffets Mentors said he prefers to stick to 5-10 picks when investing. 20 companies is asking for trouble.

Goodle the Now FIRED "Bill Miller" (tragic, man this guy didnt get STUPID OVERNIGHT!) from Legg Mason. 15+ yrs of beating the S&P500 until the last 2.5 yrs. He never invested more the 35 stock picks at a time. 24 BIL that Bil with a B and he only invested in 35 companies or less.

So money management, risk percents will be something you have to work through along with your Experience.
It's all about investing in something that's
1) Profitable
and
2) Comfortable to YOU to sleep well at night by not worrying about your investments.