Thursday, October 26th, 2017

What’s your favorite options trading strategy, and why?

How do you usually play the options market? Selling naked puts? Covered Calls? Buying deep in the money calls? Spreads? Straddles? What strategy is most comfortable – and successful – with, and why?

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4 Responses to “What’s your favorite options trading strategy, and why?”
  1. D_D says:

    I like them all. Stock fluctuations and existing market conditions warrant different option strategies for max profit. Depending on the stock and your risk tolerance, time horizon along with a good mix of fundamental and tech analysis would help you decide which strategy is best.

    I recommend reading up on the different option strategies, formulate a fundamental screen and analyze charts for trends. Up until then will you know which strategy you are most comfortable and successful with.

  2. The Shepherd says:

    options are very well priced and you will likely break even if you randomly put on positions.

    My favorite strategy is to play reorged options after a takeover and take advantage of temporarily mispriced options. Hard to find though and certainly not making a living doing it.

    Most of the people who make money in option consistanly sell OTM options and collect the premium. They have large sums of money to cover the required margin and they option scalp stock to help add profits.

  3. ckm1956 says:

    I’m a bit like The Shepherd. I’ve been selling a lot of naked calls & puts lately. I look for opportunities in low priced stocks ($35 or less). This minimizes the margin requirements. I seem to recall that most options expire worthless rather than being exercised.

    Deep in the money calls can be good, depending on the stock.
    A while back I used this to make some good money from Google.

    If you’re buying calls or puts, generally stick to months a ways out. A lot can happen in the short term to act against you, but if you have time, things can turn around.

    Options require more attention in my opinion than stocks due to the volatility.

    Remember the cardinal rule of options trading: Never commit more money than you can afford to LOSE!

  4. stockmarket guy says:

    I do covered calls, and sometimes call spreads, it is better to sell options as time value is eroding from them everday (that is my opinion). I am more interested in making a nice 3-4% per month on my money every month, than trading wild swings, the main thing is develop a system that works for you.
    Since I gave up day trading, i make more money consistantly doing covered calls for less work

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