Options Article

What is your most successful option-trading strategy?

Last Updated: September 29, 2020

Article Summary

A cop out answer to this question is any option trading strategy that results in a profit!

But certainly that is not the answer you are looking for, so let's go to a more detailed answer.

Key Takeaways

What is your most successful option-trading strategy?

There are literally tens of different spreads (and hundreds of overall strategies that use such spreads) that can effectively be applied to different market conditions. There isn’t a best strategy. However, there may be a best strategy for particular objectives, market conditions, and trading criteria.

The Important Things to Consider

1) do you understand the criteria that should be met before applying a particular strategy to ensure maximum profitability and market fit;

2) are you adept to manage the position you enter.

Trading Warning

Be careful not to fall into the trap of believing that there is a magic formula for investing in options or that a “follow-the-leader mentality” will result in similar results from investor to investor. And if you find someone selling the strategy to end all other strategies, please run the other direction and warn others on the way to the exit!

What Is Your Most Successful Option-Trading Strategy? &Ndash; Optionautomator
Options Trading Warning

Let’s Take an Example

A person who finds success selling calls against their established portfolio holdings (“covered call writing”) may not be doing so simply to collect the premiums as a profit in a neutral or slightly bullish market but rather may be primarily using the strategy as a hedge against a fall in prices, where the premium collected from the sale of the call contract serves as an insurance policy of sorts to offset losses. This is an entirely different objective from someone that looking to sell calls for income.

Frequent options trading allows you the opportunity to sharpen your skills and determine which options strategies have a higher probability for success. The strategies you employ should conform to the investment goals and objectives you have established for yourself. Seeking to emulate someone else’s success may bring you some short-term gains, but over the long term you will find that small, consistent trades that allow you to bank gains as they are realized may be a better approach than chasing someone else’s success with increasingly large capital outlays.

RELATED READ  Why implement a risk reversal strategy with options?

Ready to Start the Options Ranker?

Secure your lifetime, free account while the Brutus Options Ranker is in Beta phase (limited time).

The link below will bring you to the software without registration.  Later, you can secure your free account and save your strategy for daily ranking.
Visit the Options Screener

Was This Content Helpful for You?

About The Options Trading Education Category
With a little education and the right tools, we're confident that you'll be trading options like a pro in no time!
While we focus on Options Trading Tools and Technology, we do write some educational articles.  Hope you enjoy.
More in this Category
About the 'You Ask, We Answer' Category
Great questions set the foundation to learning any new skill.
Here you will find expanded answers on common questions we receive both at OptionAutomator and on Quora
More in this Category

Social Images

linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram
Thanks for sharing. Connect with us on social media for additional content!