Many consider trading options as very risky especially to those beginners in the industry. But, for those who have been in the industry believe that they can actually be profitable if they know and learn more about the best options trading strategies. In fact, option sellers seem to be more successful by using the best options trading strategies in the business world than other traders.
On the other hand, it is still not that easy for option sellers to gain knowledge or have the necessary capital requirements. This may even hinder them to be successful. Fortunately for them, it is not impossible. With the right best options trading strategies, they can be able to minimize the risks.
By minimizing the risks, this does not mean that the option seller will not be able to get the returns he or she wants. This is because of the fact that the option seller does not have to spend much time setting up the option trades. With the right best options trading strategies, he or she can not only be profitable because of the stock movement but he or she can also receive a consistent monthly income. Listed below are some of the best options trading strategies you can use.
One of the best options trading strategies is the Covered Calls. This is the strategy that most options traders use. This strategy allows the options seller to hold a long position in a stock while he or she sells or write call options. Mainly, with this strategy, the options seller can find more profitable ways especially if he or she feels like the stock seems to be on the rocky situation –unlikely to rise. On the other hand, the payment from the option may just enough to be profited from the trade. This means that if the price of the stock goes up more can be profited. But, if the price of the stock goes down, the payment from the option can be the only means to profit.
For the conservative traders, the best options trading strategy is selling Credit Spreads. This strategy has a set profit rate which means that with this strategy the trader can earn a consistent profit every month. This rate can either be a 10-15 % rate per month.
There are also instances wherein the trends go up in the stock market. In this situation, the best options trading strategy to use is selling naked puts. Many traders see this strategy as very attractive because as you set up the options trade you can instantly earn an income because of the upfront payment done. On the other hand, there is a quite higher margin requirement in this strategy compared to selling credit spreads. But, looking on the bright side, the risks are quite low.
There is also what is called as the swing options trading strategy – another one of what’s considered as the best. This basically allows the trader to purchase around half the price of the stock and can even let one earn twice that’s expected. Normally, this strategy can last about 3-10 days. One can reduce the risks of holding the stock with this strategy and can profit much because the change of the price of the stocks is exactly matched as the change of the price of the shares.
On the whole, in order to succeed in options trading, you have to choose what you think is best for you. Completely understand it and use it well.