Average Returns of Options Trading: The Real Numbers Behind the Hype

Intro

If you are Googling Average Returns of Options Trading, you are probably trying to answer a simple question: is options trading, on average, profitable for most people. The honest answer is that “average” depends on what you measure (per trade, per account, per year) and how you trade (buying options, selling options, short dated contracts). The best public evidence shows small negative average returns per trade for retail options overall, with a few categories doing better and many doing worse.

Tables + Analysis

Table 1: Average retail option trade returns by category (U.S. research sample)

Source: “An Anatomy of Retail Option Trading” working paper.

What to take from this: the “average return” is not one number. The big split is buying vs selling. The paper finds option purchases lose several percent on average, while naked option sales are positive on average. That does not mean selling options is “easy money.” It means the risk shows up differently, usually as rare but nasty blowups. For a broader view on how success is defined in this space, see our analysis of the option trading success rate.

Table 2: Real world outcomes for individual derivatives traders (India, regulator reported)

Sources: SEBI findings reported by Reuters and detailed breakdowns in press coverage.

Why this belongs in an “options returns” article: this is one of the clearest large scale, regulator reported looks at outcomes for individuals who trade futures and options. It is not a pure U.S. options study, but it is an honest reality check: most individuals lose money net of costs, especially in options.

Table 3: The cost problem that quietly kills “average returns”

Sources: WSJ reporting on an academic execution cost study and retail options research on spreads.

Decision takeaway: if your strategy expects to make 1% to 2% per trade, but your all-in friction is anywhere close to that, the average outcome becomes negative fast. Even small edges get eaten by spread and poor fills.

Table 4 (Illustrative): How “small negative per trade” becomes a big yearly drag

Illustrative example only, not real performance. The goal is to show math, not promise outcomes.

What this is saying: when your average per trade is negative, “more activity” usually makes it worse, not better. That lines up with why research often finds poor results in fast, short horizon options activity and why regulators keep warning about retail derivatives losses. This pattern is not unique to options; data on what percent of retail investors beat the S&P 500 shows similar challenges across broader equity investing.

Conclusion / Callout

So what are Average Returns of Options Trading for retail traders? The best data-backed answer is: slightly negative on average per trade, especially for option buying, with a few categories doing better and costs playing a huge role. Large scale regulator reporting from India also shows most individual traders lose money net of costs, and options traders are the biggest loss bucket.