Seven winners, one loser for closed trades during the April option cycle. The one loser was a bearish vertical put on SPY. By legging out of the trade, the overall loss was small. The winners include 3 other short puts on SPY, and short puts on GDX, GLD, EEM, TBT. All the short puts expire worthless, so the gain is 100% on the trade amount. The return based on margin required is in the 2% range for most of the short puts.
The good news is April is my best trading month of the year so far. That is faint praise because while I made profits every month, the pickings from Jan to Mar were meager.
Some new readers might ask why I bother selling way out of the money puts for small premiums. The answer is: the high probability of success, and continued heavy skew on puts making them trade for more than historical volatility would indicate. In plain English it is a slow nickels strategy, vs. fast dollars directional gunslinging. Some think of it as being paid to put in a bid at or below support. If there is an immediate sharp drop, the put seller is assigned and buys the underlying.
Yes, if a trader goes to full leverage and sells naked puts on exchange minimum margins it can become a highly leveraged, risky strategy. That is not my style, I tend to move slowly, do layers of different strikes, different months, hedge by buying an occasional option or vertical. If the market turns turbulent, I will use stop-losses. I also may occasionally take a shot on a low probability high reward trades.
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