Best Options Trading Strategies That Can Make You Rich

Taking advantage of options strategies is necessary for profitable financial market investing. Options trading provide investors a flexible tool to handle various market conditions, with the ability to produce big profits or protect against downside risks.

An option is a contract that, in exchange for a premium that the buyer pays the seller, allows an investor to transact an asset such as a stock or even an index at a specified price before a future date.

Let’s explore about some of the top options strategies in this blog, which we believe every trader or investor should be aware of. 

Best Option Strategies Every Options Trader Must Know

Whether or not you choose to apply these methods will depend on your trading style, but at least you will be better equipped to adjust to shifting market conditions if you know how they operate.

Bullish Option Trading Strategies

Let’s explore few important Bullish Options Strategies:

Bull Call Spread: Bull call spread is buying one call option and selling another at a higher strike price, which lowers the risk and minimizes expenses for bullish traders compared to buying shares directly.

Bull Put Spread: This technique comes under Credit Spreads category. Selling one put option and purchasing another with a lower strike allows investors to profit from theta decay and moderate price increases in the Bull Put Spread.

Bull Call Ratio Backspread:
Highly bullish; involves buying several in-the-money calls and selling others; needs strong convictions because of possible losses; yet, it is advised as an effective strategy for selling options.

Synthetic Call: To safeguard against prospective stock price decreases, an investor purchases shares and an at-the-money put option on the same stock, creating a Synthetic Long Call. This strategy is similar to purchasing insurance against severe stock price dips.

Bearish Option Trading Strategies

Bearish options trading methods for the options trading market can be used to benefit from underlying asset price drop or to protect against downside risk on existing positions. Let’s explore these in detail.

Long Put Strategy: Suitable for negative market situations, the long put strategy is purchasing a put option in order to profit from projected drops in asset values.

Bear Put Spread: Using the bear put spread method, you may profit from market falls while lowering expenses by purchasing one put option and selling another with a lower strike price.

Protective Put Strategy: Purchasing a put option lowers losses in the case that the stock price drops by protecting current stock positions against any negative risk.

Neutral Options Trading Strategies

The top neutral option trading techniques for the Indian stock market are listed below.

Iron Condor Strategy

In order to profit from steady or range-bound prices, the Iron Condor is a neutral method in low-volatility markets that combines a bull put spread with a bear call spread.

Butterfly Spread Strategy

The Butterfly Spread is a neutral option strategy with three strikes and equidistant options positions that makes money inside a given price range.

Strangle Strategy

Buying a call and a put option with separate strike prices is known as the “Strangle” strategy, and it offers a reduced cost and a larger profit potential from large price fluctuations.

Straddle Strategy

One may profit from major price changes in either direction by purchasing both a call and a put option with the same strike price and expiration using the straddle technique.

Collar Strategy

To safeguard gains and manage risk within a certain range, the collar strategy entails buying defensive puts, selling covered calls, and buying shares.

In conclusion, all options traders’ path is distinct and always changing. This options strategy offer a strong basis, but ongoing education and adjustment to market developments are crucial. Managing investments may be made easier by using an online demat account. Learn these techniques from Traders Platform’s share market courses available at share market classes in Navi Mumbai, helping traders in profitable options trading with proper risk management and discipline.