How to Use SPAN Margin to Inflate your ROI


Sep

15

2017

How to Use SPAN Margin to Inflate your ROI

In this edition of the OptionSellers.com video seminar, Michael Gross teaches how the SPAN margin system in commodities can help you create big ROIs with the Options you Sell.
  1. Good video.

    I think it’s important for newcomers to realize that ROI, when looking at SPAN margin requirements, is extremely impressive, but it really doesn’t reflect reality / real world returns in the least, if you’re selling options “appropriately.”

    First off, if you’re keeping a 50% cash cushion, you’re never going to be using more than 50% of your account balance at any one time (which is a good idea, and you’re able to do this BECAUSE of the very high ROI as compared to SPAN).

    Secondly, if you are making it a practice to exit if one side of your strangle goes double against you (or when selling naked, but I almost always stick to strangles), you’re actually going to have quite a few small losses (your profitable side of the strangle will keep the loss small, or even eliminate it entirely, if the position doesn’t go against you very quickly after placing it).

    The rest of your options will likely be bought back at roughly 80% profit up to full expiration for 100% profit, depending on how much value is left vs. how much time is left vs. just wanting to get a position off of the table.

    The great thing is that even with all of the above being said, you can have what amounts to a very nice annual return (12-15% is easily achievable if you don’t get greedy).

    Great job, guys.

    • Michael Gross Says:
      September 28, 2017 at 2:19 pm

      Dear Chris,

      Thank you for your astute observations. I believe you are on the right track and the points you make are valid if taking a very conservative approach. However, the approach is flexible and can be adjusted to target higher return as well (with proportionately higher risk.)

      Thank you again for your insightful response.

      Regards,
      Michael

  2. Another great video – thank you. I love how you guys educate new people to commodities option selling. In fact, I am in the process of making the switch from equities to commodities; I just adjusted my account this weekend.

    I appreciate all of the info from your book and these videos – thanks again!

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