I've traded options right around the pandemic, made some decent profits only to lose it all in a bad trade. I've since stopped trading options and just continue investing in my 401k and ROTH IRA. I also trade in crypto and that has now stagnated. I want to get back into options trading and while browsing through youtube for some informational content, I came across a channel called Investing with Henry.
The host seems to be an expert in options trading and one of his videos covers Credit Spread for growing a small account – this is the particular video: https://www.youtube.com/watch?v=4Y4rfffeZCQ&t=82s
My question is, how viable is this? What are the real risks? Say I have 5-10k in this account trading the SPY, how likely am I to grow this account to 20k in a few months?
Credit Spread Options Trading trying to grow an smaller account.
byu/adonis_abril inoptions
Posted by adonis_abril
3 Comments
Growing your account 2-4x in a few months? Highly unlikely. Chances of losing 100% are much higher than successfully growing it by that much.
You aren’t turning 10k into 20k in a few months by selling credit spreads.
Its a defined risk strategy, which has its positives for buying power reduction and minimizing losses, but limits the premium collected and ability to manage the trade.
Credit Spread Options for Beginners is a good book
Vertical Spreads either credit or debit are actually a good strategy for smaller accounts, but don’t expect super high returns. You won’t double or triple your account in few months, but you could increase your account size slowly and consistently.