How much money can you make trading options? That depends on your account size and trading strategy. You could make 20%-50% or more per trade on naked calls and puts. On credit spreads, traders look to take profits around 50%, and debit spreads anywhere from 10% to 50% or more. It would be best if you got started, but ideally, $10,000 or more.
How Much Can You Make Trading Options?
How much money can you make trading options? It’s realistic to make anywhere between 10% and 50% or more per trade. If you have at least $10,000 or more in an account, you could make $250 – $1,000 or more trading them. It’s important to manage your risk properly by trading them.
Let’s face it; we’re all drawn to the stock market to make money, end of the story. You’re lying to yourself if you say otherwise.
Perhaps you dream of the day you can flip your boss the bird, wake up in a hammock on a beach, or race hedgehogs in Spain – I don’t know, I’m not judging.
But what I do know is it’s going to cost money. And maybe that’s why you decided the stock market is your answer.
So, the million-dollar question is, “How much can you make trading options? You might not like my answer.
I don’t know.
Basics on How Much You Can Make Trading Options
Before answering how much you can make trading options, you need to understand what options are. Options have an unfair perception because people don’t take the proper time to learn how to trade them. They’re a great way to make money with a small account.
One option contract controls 100 shares. As a result, you’re paying the premium to control 100 shares instead of outright buying them. Options give you the right but not the obligation to buy (call) or sell (put) a contract at a set price within a certain time frame.
Did you know that options have strategies that allow you to make money in any market? Yes, even sideways markets. That’s part of the appeal of options trading.
There are a lot more moving parts to options trading than to trading stocks. Then, you’ll be ready to face the options head-on. Hopefully, it answers how much you can make trading options for yourself.
Ivan’s Story
Now that I have your attention, let’s start with what not to do. Here’s a little story from Ivan. In 2006, Ivan quit his job and started trading full-time with a 100k account.
So far, so good. Over five years, give or take, his account dwindled to around 14k. So far, not so good. What happened? For those who don’t know Ivan, he’s highly emotional and compulsive.
Which, unfortunately, spilled over into his trading. He made the rookie mistake of trading on gut instinct and being trigger-happy, jumping in and out of trades. That affects how much you can make trading options.
He knew, in theory, how to trade, but when the rubber hit the road, his emotions were behind the wheel. Emotion will always affect profit and loss. Hence, answering the question of how much you can make trading options isn’t easy.
With 86k down the drain, what did Ivan do? He didn’t drive the car off the road, although I’m sure it passed his mind.
He had an AHA moment, pulled it together, and realized he needed a system or a set of rules to govern his behavior. No more guessing, no more hoping and wishing.
No, he decided to structure his trading operations and give himself a set of rules or modus operandi; with the 14k he had left to trade with, he made his fortune. In his own words, here are Ivan’s “rules.”
Ivan’s Rules
I would risk about $450 per trade, allowing me to place about 15 trades (using leverage), which meant I would have about 15 chances to increase my account to a more decent level.
When (and if) I reached such a level, I would decrease my risk and leverage, ensuring that risk became less volatile and more linear.
I would be completely okay with failure. If I were to blow that remaining amount off my account, I was ready to bite the bullet, return to my old employers, and beg them to take me back again. There is an old expression: the end justifies the means.”
To make a long story short, Ivan grew the account. As the account increased, he slowly reduced position size because conserving capital became more of a concern.
Fast forward to today, and that account is well past the 300k mark. So, how much can you make trading options?
Does Account Size Matter?
Honestly, the size of your trading account has no bearing on whether or not you are or will be a successful options trader. Firstly, you need to view market success as a function of whether or not you followed your system or rules. Secondly, is your system profitable?
If the answer is yes and yes, you’re successful. So, if your account is $2,000 and you consistently make $200 monthly, you should consider yourself a successful options trader.
Even though you obviously can’t quit your job just yet, you’re successful.
Focus on trading the markets, not on making money. This might put a damper on how much you can make trading options.
Some people start trading with a 25k or 100k account and quickly lose all their money- remember our good friend Ivan? In contrast, other traders start with 1k and, in time, build a substantial trading account.
Your success lies not in the size of your trading account but in your beliefs about successful trading. Trust me, the money will follow if you learn to trade the market successfully by following your trading rules.
If you can afford one contract on this options chain, that may be all you need.
The Universal Secret to Making Profit
What do people who make a lot of money in this world have in common? What about Tiger Woods and Bill Gates? Or how about Warren Buffett and Venus Williams?
At first, you might say “nothing” other than they all make a ton of money. But what is the one thing that makes these people so successful while the rest of us struggle to get out of bed in the morning? One word: specialization.
“Specialization is the secret.”
What sets those who make a lot of money apart from us is that they focus on one thing. And they practice it again and again and again until they get the results they are looking for.
All the people I have just named have “mastered” one thing. I’m confident they had ups and downs along the way, but they did not let that bother them; they just kept going. Furthermore, you might find a great book called “The One Thing” interesting; I sure know I did.
