Trading options is fun and exciting. And in my opinion, less risky than buying stock. That is just my opinion, I might be biased. In a few days, I will be celebrating a postion that is a drag on my profit for 1 year now!
About a year ago, I was very into selling puts on goldminers. I have made a decent return on my puts in the first 8 months of 2016: 1363USD in fact. I was on a roll, I was the king of the world! (added for extra drama)
So, I kept writing puts on these miners. Why not?
And then people no longer wanted gold, miners were dull and the price went down, my puts went in the money, actually, deep in the money. Panic? No! Roll, yes!
We are now one year later, and here are the results
1 assignment at 28. Let me tell you, that hurts. When I add this buy to my positions, my average price goes up to 19 and change. Still making a profit.
3 puts at 27 that I have been rolling ever since. This rolling is not always easy and straight forward. Not always as I would like it to be. And the risk of assignment stays. The result so far is a return of 5,88% in premium (after all costs) on my position in one year. And this assumes that the positions expires out-of-the-money this summer
This not the kind of return that I look for, I aim for more in my options portfolio.
To be transparent, I will look to buy back my options, so my actual return will more be around 2-3 pct.
Good news, that is not a loss and beats the return on a savings account.
Bad news: that is below the return of the world ETF that I have. That one made approx 11pct since then.
It is not all sunshine in the options trading portfolios.