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Finding the Best for Many Option of Trading Strategies PDF Print E-mail

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What is your strategy option of stock trading?  Although options trading is often considered risky, it is generally both safer and much more profitable than stock trading.

The wonderful thing about options trading is that allows for a many variety of strategies to be developed that all have differing risk profiles.  Even though broker fees for options trading are significantly higher than those for almost any other kind of trading, this is offset by the much profitability available easily. The key to best option trading is to "own" a strategy, to know it intimately, and to use it consistently and with clearly defined trading rules.

The absolute best options trading strategies that minimise risk and give very respectable profits:
1.    Selling Credit Spreads - with almost no work, and about 30 minutes a week, it is possible to grow your portfolio by 10-15% every month. Success depends on simplicity, and this is not a strategy suitable for hyperactive traders or those who love to over analyse everything. 
2.    Selling Naked Puts. This strategy really only works in an upward trending market, and has a somewhat higher margin requirement than that of credit spreads. The great thing is that, like credit spreads, you get your profit up front.
3.    Buying and selling DITM (Deep-in-the-money) options.  These a great swing trading strategy, and enables you to effectively buy stocks at about half price, and so can double your profit. Because your trades are all short term (3-10 days), you are not concerned about dividends or other factors relating to buying and holding stocks, but you do benefit because the price movement of the option that you purchased is exactly matched by the price movement of the stock.
4.    Selling Covered Calls - This is a strategy that stock traders should not be doing without, but don't use it if you own stock for sentimental reasons - stock trading must be your business.  So, if you occasionally get called out and end up selling your stock, you can quickly move on to the next one.
5.    Complex strategies like straddles, strangles, iron condors and butterflies.  These are all low risk, highly profitable strategies

 
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