hi eTradehome, Dave & other experienced traders,

please share your experience about the viability & sustainability of solely living on the income from trading (selling) options.

is income from selling option sufficiently certain to generate a regular and dependable source of income?

i read from some of the threads that in some months there might be 'turbulance' & hence repair (rolling) strategies would have to be used to salvage the trades leading to reduced/delayed profits or minimised losses. if one is depending solely on that income wouldnt that be a 'hungry' month?

if i intend to live of the profits from selling options (tired of JOB!!), please share your views on how I should go about doing it.

i have attended a few option trading courses (but not etradehome's) but somehow do not think the approaches work consistently either becos the strategies are too complex or time consuming (having to scan/filter for underlying, fundamentals, option selection etc). is it me or is trading for a living a myth for many?

thanks in advance.

my answer to those that ask me many times is always the same. I make on average 8% a month consistently. Deduct a bit off. Let use a conservative figure at 5%. Can you survive with 5% profit a month. And do you want to compound your money if you don't compound your money will never grow. So let just agree that you need to compound portion of your winning.

5% a month let compound 1/2 of it and 1/2 of it for withdrawal. That make it 2.5%.

I do not know about you or your living expenses. Simple maths if your trading capital make you 5% a month and you withdraw 2.5% every month and it meet your living expenses that I can say you can give it a try.

For most people 2.5% return is not enough for them they need to make 20 - 30% to be able to trade for a living. So they have to increase the capital (work more and save more and pump more to trading) or cut down their living expenses (this one never work)

so there you have it, this formula is simple, alternative if you can find a system that make 30% a month consistently and it meet your target you can do that too but would appreciate if you let me know the system.

I fire my boss 5 years ago.

Hi WinOption,

Trading for a living means living with frugality. Save Save Save. Joking!

It depends how much is the capital you use. For non-directional strategies, it is about 2-10% return per month. On the average, it is about 40% to 80% per year. It is very hard to achieve more than 100% return per year because of the rollover.

If you use $100,000 as capital, that is $40,000 per year on the low side, $80,000 on the high side. If we use $10,000 to trade, that is only $4000 to $8000 per year. Of course if you use $1 millions to trade, you will probably get $400,000 to $800,000 per year.

You may say $400,000 per year is more than enough. No, when you use $1 million to trade, your lifestyle is different. You could someone living in nice condo, drive Ferrari, wear HugoBoss/LV/Prada... $400,000 per year is not enough, still has to work hard to cover the posh lifestyle.

Sun said before, use options writing to generate a more consistent income for your daily expenses: utility, incidental, holidays etc. Do not fall into the 'NLP trap' of quiting job tomorrow or lay your feet on a rattan chair on the beach next month and doing nothing.

Options writing is a more consistent technique compared to 'buy call buy put technique'. As you say, you have to spend hours to do research on the stock, the trend, the news and you trade. Do you think we will win all the time, every day? With this swing trading technique, there is also no consistent income. You can not quit your job too. Do you think those market makers do not do any research and let us win all the time?

Salary is the safest bet for income. Sometimes it is not too difficult to past a month. Use decayed time value to buy us extras, which we use our salary to buy traditionally: holidays, nice clothes, nice movie like KungFu Panda, good food and probably a LV for our loved one.

If you come to any problems on options selling and options repair, write to us. I think this forum participants (and Etradehome) are very helpful and responsive.

Good weekend! Enjoy your time decay.

Hanz

hi hanz,
may i know which stocks/ETF do you construct your short guts on to achieve more than 2% return or even up to 10%? for me, most of the time it is just close to 2% and most of the time less than that. cos i play mostly on ETFs.

trading for a living is not as easy as it seems and i supposed beginners to trading cannot take that as an immediate dream when first starting out trading. it is going to give you tremendous stress trying to make things work out well when you are still new and learning the ropes to profiting consistently on a monthly basis. though not one myself yet, but i believe it is good to take it in your own pace first while holding on to your job, build up your capital at the same time and hone your skills at it for a few years before talking about making a living out of it.

a game against the professionals is definitely not going to be as easy as many people claimed. work hard at it and hopefully one of these days we see more people who are really able to make a decent living out of it in this forums selling options! :)

cheers!
ky

Good questions KY!

I used to construct short guts on a lot of single stocks because the time value is near 5% to 8% of the margin requirement per month. But most of them requires repair (up and down), and because I put the range quite tight ($5 up and down), my return drops to 2 to 4% per month after repair.

After talking to other options writers and Sun, I will convert all these to ETF/holder/SPDR..those basket of stocks stuff.

I like to have short guts on XLE, USO, EEM, SPY, EWZ, OIH now. I still have those single stocks: LEH, MER, ENER, GM, C, JCP, TGT etc. When they expire in the range, I will move all to ETF. ETF does not require constant rollover, and the return is kept at 4-8% per month, most of the time.

What stocks/ETF you have now short guts on now?

Hanz

hi hanz,
thank you for your reply. i am having short guts on qqqq, spy, xle, iwm and mer.

rolled the spy and q since march, so cannot really say etfs require little rollover. :)

mer i have to roll it till oct. breached downwards the other day..... :(

yes, once the mer is over, i will go back to all etfs again.

by the way, hanz, how long have you been playing short guts?

rgds
ky

Hi Hanz,

are you from Singapore or Malaysia? Maybe we can meet up for coffee if you are in Singapore. Hard to find a full time trader that make consistent income. But I do believe I have convert 1 person to be a full time trader and more to come.

Hi KY and Dave,

I am holding a Hong Kong passport, residing in Singapore temporarily due to my project.

I stated using short guts just about a year ago. That was the time I attended Etradehome non-directional options strategy course. I like it, really. Never in my mind I could sell time for pocket money.

I am not full time trader, not yet. Probably I won't go that path until 55 years old. I like my job (too good a pay to quit, too exciting to work everyday..).

Trading by earning time decay suits me because I am too busy for projects most of the times. Options writing really suits my lifestyle because I normally entertain until midnight.

I am going to Vietnam for next few months, hope I can get good internet signal there.

All the best to all the options writers.

Hanz

Hi Han,

that good, actually when I am working I hate my job, when I am a full time trader I miss my job. Selling Options suit me because all I have to do is to wait. And it make me lazy now.

My old job require me to travel often and I really miss those life. But what is over is over. We got to move forward.

Sell Sell Sell