Experiences from 3-4 Years of Trading ETF Options

Since I started trading ETF options in 2022, it’s been about three or four years off and on.

At first, I was attracted by the high risk-reward ratio of options. After trading for a while, I realized that buying options is really hard to profit from, and selling options offers a higher probability of making money.

After a period of being a seller and doing double-selling strategies, I found that being a seller is really stressful and tiring. I constantly buy and sell to hedge against both sides to prevent excessive imbalance, but in the end, a sudden big market move caused me to lose a lot of money. Sigh, it’s true that a single day can burn through a thousand days’ worth of fire.

When selling options didn’t work out, I started trying volatility strategies—what people call trading low-volatility options as a buyer, doing spread combinations that benefit from theta decay, and trading high-volatility options as a seller, profiting from theta. I made some money with this approach before, feeling like I had discovered a new world—earning theta is very difficult, but earning vega is easier. However, after experiencing several market reversals and upward waves, I realized this strategy also lost a lot—buying in-the-money options that dropped more, and selling out-of-the-money options that gained less (during the upward reversal). Sigh, any strategy has its ideal environment, but environments change. Can the strategy adapt accordingly?

In the end, I found that trading ETF options still comes down to the same core principle: the direction is the most important. If you get the direction right, you will profit regardless; if you get it wrong, even the best strategy will lose, and possibly lose more. As for timing, just keep an eye on it. The key is the market direction—it’s extremely important and also the most difficult part.