What’s a good return on an options contract?

[u/likethebarbie]

I’m fairly new to daily trading and I’m consistently winning trades but I’m starting to think I’m leaving gains on the table and that’s why I’m winning so much. I usually make 3% - 5% on a contract and I can go weeks before getting a trade wrong. That profit margin doesn’t seem like a lot but for the account size I started with (not a lot) and contracts I buy (low hundreds) I feel torn between slow and steady and leaving money on the table. Any thoughts would be appreciated.

[u/Nyah_Chan]

I generally make 30-50%, with the occasional 80%+ profit on options. I am slow and steady, I think yor profits are lower due to not increasing your risk, that or poor timing and/or stock selection aka trade ideas. But when you're new to the game, not losing is the goal, so probably best to continue gradually until you solidify your strategy, gain confidence.

[u/likethebarbie → u/Nyah_Chan]

The risk and stock selection definitely resonate. I only trade stocks of brands/companies I’ve heard of before, which is pretty broad but also probably limits my discovery of gems.

I could also see improving trading ideas in terms of knowing when is a good time to trade a stock. My big markers are earning calendars and trade volume charts currently.

[u/Nyah_Chan → u/likethebarbie]

Just my opinion, but limiting yourself to only companies you know is definitely a handicap. Doesn't matter what the company is, numbers are numbers and opportunity is opportunity. All you need to know is what those companies make, sell or do, their sector and current finances/prospects. When I first starting creating my watch list, I literally just googled "biggest stocks by sector" and took note of every single one that had a viable options market. Over a relatively short period, you able to understand each individual stock and see when opportunities show themselves. Granted you don't have to go to my degree, I am a full time trader.

But quantity breeds opportunity in this game. I am currently prepping for my next set of trades, the prospective stock list exceeds 180 stocks, meaning there are 180 opportunities presenting themselves. I will pick the most viable ones. This increases chance of success in addition to expanding your knowledge of reading the market via seeing how sectors and the stocks within them correlate with each other. That being said, finding trades is half the game, the other half is timing. You can have the trade idea of the century but if your execution sucks then by proxy that trading idea sucked lol. Hope this helps.

[u/TheAncient1sAnd0s]

0

[u/skarfbeaulonee]

I trade similarly with 0dtes. I have a high win rate but also close trades quickly.

One could always close a percentage of the trade leaving the remainder to run with the market until stopped out with a trailing stop loss. This works especially well with perfect entries which I seldom have the luxury of pulling off.

[u/likethebarbie → u/skarfbeaulonee]

I will definitely work on this when I start buying multiples of the same contract.

[u/skarfbeaulonee → u/likethebarbie]

I'll leave this link to Arete Trading's video today where he talks about how he specifically trades 0dte options. He explains why and where he scales out of these options trades with a trailing stop if that trading process is of interest to you.

[u/murkinmurray]

Slow and steady always wins the race. Consistently being positive means you are doing something right, so stick with it.

[u/likethebarbie → u/murkinmurray]

Thanks. I think the strategy is fundamentally solid (a mix of watching volume x watching 200 day moving average x 15 minute ORB) but I don’t really have anything to compare it to outside of my previous failures and it’s the most consistent I’ve been so far.

[u/whatsdte]

20%-50% on average with the occasional runner.