Hi! I’ve made ~800% over the last 6 months with a basic strategy of selling options on highly volatile stocks (which I am confident in) and buying cheap OTM options on less volatile stocks to take advantage of any black swans. One of those black swans was GME, and without GME I’d be closer to a 250% or so increase (take that how you will).
A pretty safe strategy imo is to put most of your account into near-NAV SPAC’s, then use margin to sell puts on stocks you would like to own. The SPACs have very little downside risk, and selling puts is fundamentally less risky than owning the stock itself, but you have potentially high returns if the SPACs do well or you are selling puts on highly volatile stocks.
In general, I believe the average less wronger to be more intelligent than the average trader (possibly even the average professional trader) and thus capable of achieving steady returns which beat the market. Maybe this is just survivorship bias talking, though.
Kudos on your great returns. I don’t have any particular quibbles with your strategy although I would caution other people to think hard about whether or not they have a good sense of what is “cheap” or “expensive” when it comes to single stock vol. Ending up on the wrong side of the next GME will be very painful.
In general, I believe the average less wronger to be more intelligent than the average trader (possibly even the average professional trader) and thus capable of achieving steady returns which beat the market. Maybe this is just survivorship bias talking, though.
The “average trader” is not a particularly good benchmark. Performance is very skewed, and the vast majority lose money. I am assuming by “average” you are referring to median. The mean trader breaks-even (mechanically) as we’re talking about a zero-sum game.
“Intelligence” isn’t the only relevant skill. The difficult parts of trading are not usually “being smarter than the market” but things like:
The average retail trader underperforms the market by 4-5% per annum before costs. Far worse than this after costs. Yes they have negative skill.
The average professional fund manager outperforms the market by less than 1% before the costs they charge to the punters. After costs they underperform.
The average professional fund manager works very hard and has studied finance for years.
My point is you need to do a lot better than average to win.
Hi! I’ve made ~800% over the last 6 months with a basic strategy of selling options on highly volatile stocks (which I am confident in) and buying cheap OTM options on less volatile stocks to take advantage of any black swans. One of those black swans was GME, and without GME I’d be closer to a 250% or so increase (take that how you will).
A pretty safe strategy imo is to put most of your account into near-NAV SPAC’s, then use margin to sell puts on stocks you would like to own. The SPACs have very little downside risk, and selling puts is fundamentally less risky than owning the stock itself, but you have potentially high returns if the SPACs do well or you are selling puts on highly volatile stocks.
In general, I believe the average less wronger to be more intelligent than the average trader (possibly even the average professional trader) and thus capable of achieving steady returns which beat the market. Maybe this is just survivorship bias talking, though.
Kudos on your great returns. I don’t have any particular quibbles with your strategy although I would caution other people to think hard about whether or not they have a good sense of what is “cheap” or “expensive” when it comes to single stock vol. Ending up on the wrong side of the next GME will be very painful.
The “average trader” is not a particularly good benchmark. Performance is very skewed, and the vast majority lose money. I am assuming by “average” you are referring to median. The mean trader breaks-even (mechanically) as we’re talking about a zero-sum game.
“Intelligence” isn’t the only relevant skill. The difficult parts of trading are not usually “being smarter than the market” but things like:
Having high quality information
Having high quality execution
Temperament
The average retail trader underperforms the market by 4-5% per annum before costs. Far worse than this after costs. Yes they have negative skill.
The average professional fund manager outperforms the market by less than 1% before the costs they charge to the punters. After costs they underperform.
The average professional fund manager works very hard and has studied finance for years.
My point is you need to do a lot better than average to win.