To be abundantly clear, this post is purely to share some of my experience to hopefully give others ideas. I saw a couple posts with people questioning the efficacy of actually making money trading options. While it is incredibly challenging (and it should be), it’s entirely possible. I’ve been trading for a while now and have gone through a few phases in my portfolio, creating a foundation, to aggressive growth, and now growth / income. I started with a few K in 9th grade and now trade a 7 figure account at 31. I had a couple mentors guide me which is why I’m making this post, to try and help others. A couple things to consider for newer traders.
1. SAVE. Gotta save. The more principal you have, the greater the impact compounding return will have.
2. Start small and write it out. If you can’t make money with a few K, the process doesn’t magically get better with more money. Yes, there are advantages with larger accounts but the concepts remain similar. Write out a plan and track what’s important - it’ll help immensely and I wish I started that earlier.
3. Variance premium should be part of everyone’s strategy. If you’ve read any of Euan Sinclair’s work, you’ll know about this. While I don’t necessarily agree with him that it or inefficiencies are the only source of edge, I do think they are essential to every option traders toolkit.
4. Practice a lot of strategies but get really good at a few. For me, the covered strangle, ratio diagonals, straddles, and strangles are my go to’s. I’ll play with butterfly’s and some other strategies but I’ve spent tremendous time refining the ones listed above. Papertrading is an AWESOME tool to practice a bunch of strategies and to create a data set based on your rules. It’s worth it.
I certainly didn’t find my way on my own and most others won’t either. I’m still learning every single day and am thankful for the community.
If you’re new, it’s challenging but entirely possible to do well. Don’t allow the limiting speech of others tell you otherwise - just because they aren’t able to achieve something doesn’t mean you can’t. Just have to work smart and hard.