As a Delta Neutral Trader, I’m often asked if achieving returns of 100-300% are realistic while trading an account delta neutral. After completing one of the Optionetics 2-day workshops., one might wonder if trades that are hedged would attain returns that money managers would envy.
While most of the trades that I take are dull and boring, they do have the ability to reap great rewards when looking at the capital at risk. I normally do not have more than 20-25% of my trading capital working at one time. Let’s take a look at an example using the WealthWire Futures Account for 1997
WealthWire Futures - Real Time Account
Account Start at 1997 - $10,000 (Beginning Balance)
Number of Trades taken - 44 Trades
Average Number of Days in Trade - 15 Days
Average Cost of Each Trade - $300
Account Balance to Date - $17,010 (After Commissions)
Return on Investment - 280%
Return on Account - 70%
Notice that the Return on the WealthWire Futures account stands at 70 percent. This average is quite above that of the S&P, which is currently up just over 20 percent for the year. However, when looking more closely, the Return on Investment is up 280 percent for the year. Return on Investment is the return on the cost of trade. If one trade cost $300 to enter, and was exited for a $300 profit, the Return on Investment for that particular trade would be 100 percent.
As you can see, it is possible to achieve a high rate of return while risking very little on your account. Optionetics strategies allow this with both directional and non-directional trades. I know this is true, because I do it every day. Good trading!
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