2017 option trading review – we continue in 2018

With 2017 behind us, it is time to look back and review what trading option thought me. I now trade options for 2,5 years and really geared up early 2017. Let’s start!

First, let us look at the december results

Option Income – 551,09€

In December, I realised in total 551,09€ euro of profit. This income comes from 19 stock.

For the first time, I also sold a put on a stock with a price well above my “mental” limit. I did this by setting up a put spread: I sold a put and bought a put with a lower strike. This way, I did a defined risk trade. I knew that my max loss would be limited to the difference between the 2 strikes. All other trades I do are “naked” puts. The max loss is there the strike of the put. This trade brought in nice money, compared to the “risk” I took. I consider doing more of these trades.



2017 In review

For the whole of 2017, My option income  total 7100€.  1K less than our travel budget. That is a nice context to know!

A pure numbers results is not a useful info. It needs to be put in context: how much risk did I take and how much capital did I reserve for that.

On the risk side

I use 1,5 leverage. That means that I have for every 100€ open put position around 66€ of collateral in my account. I could go way higher than this. Brokers allow you to go up to 3-4 time of leverage. I decide not to do that. Why? I want to sleep well at night.

On the capital side

My return on capital comes in at 13,27% (USD converted each month to EUR – virtually). Note that my capital was not stable throughout the year 2017. I added in different steps capital to my portfolio and plan to keep it at this level.

Is 13,27% a lot?

Risk and return go hand in hand. Trading options is equal risk to owning stock. So, only a comparison to stock is honest. Comparing to a savings account with a 0,11% yield is not fair!

Some ETF performances

SPY – 19,6% when measured in USD, 6,5 when measured in EUR

IWDA (EUR) – 5,9%

EMIM (EUR) – Emerging markets went well in 2017 : 22,4%

On a personal level, I am happy with this return. It beats the return that I use in my FIRE calculation. And the cash flow from this would allow us to pay for holidays when the kids no longer want to join us. That is a nice perspective.

Will it last?

Trading mostly short put options in a bull market is easy. Why: a short put – or selling a put – is a strategy that makes money when the market goes up. Question is: how high can it go, how much longer can it go up? Will I be happy to have all my cash trapped in stock when the market goes south and I need to buy all these stock? Let us see the next year



15 thoughts on “2017 option trading review – we continue in 2018

  1. Ciao ATL,
    Nice results! On the option trades return I have several difficulties in calculating a proper AROI result. Mostly because the capital that I allocated to option trades was always different and this doesn’t help in the calculus. I see you have the same issue, what calculation did you adopt to come up with 13%?
    Ciao ciao


    1. Hey Stal, I note each month the amount of money that I block on my option trading accounts and then calculate the average over a year. It does not matter if I use this for margin or not. A sample: first six months I have 10k and then 6months 20k. This makes on average 15k on my account. I then calculate my realised results and divide that by the 15k.
      2018 should be simpler as I have reached the amount that feels ok for me. I no longer plan to add to the options trading account.


      1. Ok I get it, you do averages like me. Makes sense. I am still trying to find “a better way” to calculate the investments… 🙂 Do you do covered calls too? How do you account for those?


        1. Covered calls are ignorable on my portfolio. What I do: when assigned stock, my money is assigned to that and no longer available for options. It stays counted towards my investments.


  2. Well done, my benchmark for option returns is the long term average returns of my home market which is around 8%.
    My view is option trading allows you to make money in up,down and sideways markets. Last year market returns were much higher then historical averages.


  3. Good return for your leverage level! I should have included my leverage level in my overview too! I am moving towards 1,5 leverage this year also so expecting that my return will be less going forward.


  4. Well done and carry on for 2018.

    >>>All other trades I do are “naked” puts. The max loss is there the strike of the put.


  5. >>Will I be happy to have all my cash trapped in stock when the market goes south and I need to buy all these stock? Let us see the next year


  6. Nice work on the options trading! I gave it a go a while back but not for me… I prefer being able to understand the value of a business I’m buying a piece of. Glad it’s working out for you! All the best for 2018!


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