Options trading - selling naked puts - any objective performance results?

Manage
1

Not a week goes by lately without hearing about how easy and profitable Options Trading is, especially through selling naked puts.

I usually see this coming through from those investors who aren’t usually stock investors; there’s a lot of excitement from investors in my real estate network. Some of the claims are quite outrageous - “my electrician made 6 figures in 1 year, just from options trading. No previous stock investing experience.” Really now? Or “I wish I learned this strategy when I was much younger, it’s life changing” etc etc “I sold one of my properties just to invest in this strategy” etc etc

Whenever I hear about this, or read up on some of the plugs for this type of system, it just has the “get rich quick” smell and feel to it.

And now, it seems there is an entire subindustry built on it, i.e. teaching the system, for example:
https://www.stockhackeracademy.ca/early

As a quant, I need to see the numbers, but I can’t find any! I cannot find any reliable or objective source of the actual returns achievable through the system, and just how robust or significant the findings are.

On the flipside, I have found investors who have tried the system and warn against such a system, but again without any real data to back it up.

Has anyone found any reliable data on this strategy, or invested in it with real, unbiased experience?

Cheers,
Ryan

2

The CBOE has data on most of the major systematic strategies. There is no free lunch. You can get rich selling options, and then broker. The equity curve is smooth and upward rising, and making 2%,3%,4% per month for years is possible, until one major market move and spike in volatility wipes out years of gains. Not to mention that only the most heavily traded names have sufficient volume in their options to make trading viable.

Options, like any other investment has to be looked at as risk vs. reward and managing both to suit your needs.

Finally, always ask yourself, if this is system is so unbelievable and safe, why are you selling it?

http://www.cboe.com/products/strategy-benchmark-indexes

3

I’ve built an engine to backtest options using methods similar to P123 (cross sectional). Ping me for details. But the bottom line is I’ve found theoretical strategies which work but it’s hard to trade options due to leverage restrictions, short selling restrictions, market impact, etc. Options are a dealer market meaning you are usually trading against a professional; not something recommended.

I do think P123 should incorporate options into their backtesting capabilities. It’s not much money and they have much of the infrastructure built.