End of Year numbers (Option seller)

Hi All,

Just wanted to understand what is a decent benchmark for option sellers. While i looked at my P&L for this FY, these numbers came out:

  1. My profit (excluding broking/govt taxes) stands at 12.90% of the overall turnover
  2. My broking+Govt. taxes are 7.12% of the overall profits

What is a decent number on these params ? Or is there a param which i’m overlooking ?

@Jason_Castelino and other option sellers on TradingQ&A, need your insights on this

Not sure if I am the right person for this since my style of option selling is very different from that of most others. Anyways, let me share some numbers.
I am of the opinion that risk and return move in the same direction. So if you are making higher return, whether you know it or not you are taking higher risk. Margin for my OS selling comes from 90 percent collateral and 10 percent cash. So I always measure my returns at account level. My target is just 25 to 30 percent per annum.

Not sure how you have calculated turnover. If it is as per the guidance notes issued my icai, then mine is around 70 percent of turnover.
On the basis of contract value as turnover, I have never calculated.
But I don’t see any meaning in this number either.
Return should be measured in the basis on capital employed. Your turnover can increase if you are taking hedges. I go naked and I win 95 percent of the times. So obviously turnover is lower. So right base would be the account value.

Mine is around 2 percent. Again it has got a lot with the win ratio since expenses are there irrespective of whether you earn profits or incurre losses.

Return expectations from the great RJ you can benchmark his return:

With small capital <40L good target is 30-35% ; With > 3cr → 18-25% should be achievable target for skilled trader( no guarantee every year).

Also, ROI should be calculated on Margin not on Turnover.

Not even on margin. It should be calculated on account value. If you take a trade with 1 lakh margin, you would still keep 20k extra in your trading account. So return should be a percentage of 1.2L


First time i have heard someone mentioning their return as percent of turnover.This metric is useful for tax purposes.

In general conversations, we calculate return as percent of capital. My return this FY has crossed 100%+. I am taking around 3% risk per day which is high and had drawdowns of 9% twice.

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Yes, totally agreed!

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This is a quite a interesting strategy. Ever since i started trading, one of the core things which i swear by is to always have a hedge. Have you written down your strategy someplace?

PS: I do calculate wrt my captial deployed however i never utilize 100% of my captial for trades. 20-30% is always left for unwanted market movements. Overall i know i’m over 30% this year but i cannot pinpoint exactly the number (money keeps going in-out, buying/selling pledged shares or even by debt funds)

These are pretty good numbers. Was there any option buying as well while doing these trades ?

To be precise, mine has been around 30% for this year- but i can’t really pinpoint since some money is always unutilized in my account.

Also, this was just F&O profits. Not sure on the gain on the underlying (pledged -stocks, index funds, debt funds, SGB etc.)

I have posted it multiple times in forum. Too lazy to search for it now. :sweat_smile:

You need to calculate xirr at account level. It will consider all pay in and pay outs.

Unutilised money should also be considered as capital employed. Even that money carries opportunity cost.