Trading Options | How Much Money Can You Make?

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Many people often wonder how much money they can make trading options.

It’s an extremely difficult question to answer because of the unlimited strategy possibilities one can trade and how much risk is taken in each trade.

In this video, we try to give an honest look at return expectations (as well as drawdown potential) when trading options.

To do so, we’ll look at historical returns and drawdowns for a systematic Short Iron Butterfly strategy on the S&P 500 products (SPX Index and the SPY ETF).

Hopefully, the video helps shine some light on some expectations people should have when trading options successfully.

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UmTheMuse says:

If I didn't know better, I would've said that this video was in direct answer to my question/comment on possible returns. One thing I noticed in this, your percentages compare the trade to the amount in the account, rather than the amount at risk. The 10% figure doubles all of the results from the 5% (for example). This is important because it shows one of the most amazing things about neutral option positions: each side of the trade is perfectly negatively correlated with the other side. That's the holy grail in stocks trading, and lets you scale indefinitely without additional risk.
The other thing I learned here is that 25% in the Iron Butterfly strategy was actually safer than passive investing. That's amazing.

James Bradley says:

This was very helpful. Thank you for making the video. ??

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