Invest and Trade Profitably with Jon Johnson

In establishing a position whether it is a stock or call/put option, how much are you investing per trade (money-wise) in order to have a decent and worthwhile profit?

August 30, 2000

A reasonable and worthwhile profit varies from investor to investor. It also varies depending upon how much your brokerage charges you to make option and stock trades. Given that, some are happy with making $500, $750, $1000, $5000; the amounts are as different as the individual and that investor’s goals. What we look at in most cases is a percentage gain. Whether we put 5%, 10%, 20% or some other amount of our trading or investment capital into a play, we are looking at what kind of a return we can make on the trade. 5% for a day is not a bad return. 10% or 20% for a week is not bad at all. On the recent selling bouts that we have seen, option positions have been returning 30%, 50% and more in just a few sessions. Thus, it is not the gross dollar amount, but the return on the investment. Is it worth it to make $1000 on an $8000 investment in a session on some QQQ options? 12.5% in less than 8 hours is not a bad use of money. If you put $4000 in that trade it would return $500, the same percentage. When compared to putting it in the bank, that return on your risk capital is very nice indeed.

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