Below I've tallied up my individual wins, losses, scratches, and averages for the year. Most of my trades had between a 60-70% on entry. Let's see how it actually turned out:
I think the risk/reward balance here is interesting. What this is saying is that, on average, I risked about $115 to make $33 on a per-trade basis. If we calculate my theoretical odds of breaking even using these numbers, they work out like this:
POP = Risk ÷ (Risk + Reward) × 100%
= $115 ÷ $148 × 100%
≈ 78%
My theoretical POP based on my realized averages would have been right around 78%. My actual break-even frequency was a little higher at about 84%. I suspect this discrepancy is the result of a couple things: Overstated risk priced into the options as well as my early management of winning trades.
Alternatively, 78% could be viewed as the break-even frequency necessary to not lose money. While I have a high probabilistic edge, I also have a high bar to live up to... It might serve my benefit to bring that requirement down a bit by narrowing the gap between my average win and average loss. This would be achieved by raising my average profit, reducing my average loss, or both. For me personally, the 65-70% range sounds like a goal I'd be comfortable pursuing. Trading strikes a little closer to the share price and/or more aggressive defense seem like potential paths to achievement. The tradeoff for doing so, however, is risk of more frequent defense. This could result in more scratches, more losses, and/or greater losses.
Lastly, I'd like to make note of my average profit size relative to my average maximum profit potential. When I place trades, my target is usually around 50%. My realized average percentage is actually about 26.6%. I think this discrepancy is to be expected when accounting for trades that don't work out as planned. Still, it'd be nice to bring this number up. More patience, more and more frequent swings in implied volatility are all factors that could help me achieve this goal.