Before you learn these options trading strategies, must know that these strategies have variations and I have shared the best and profitable to start with.
SELL OTM PUT & CALL 2 Lots each current week expiry and buy 1 PUT & CALL of next week’s expiry whose premium must be equal to sum of 2 lots you sold ±5 points.
Iron Fly is one of the best trading strategies out there. All you need to do is just sell At-the-Money CALL and PUT option and buy Out-of-the-Money CALL and PUT options to limit your losses.
It can be made with directional view: Bullish/Bearish. Sell 1 ATM PUT option, if you’re bullish and buy 2 OTM PUTs. Or sell 1 ATM CALL and buy 2 OTM CALLs, for bearish view.
SELL 1 OTM CALL + PUT of current expiry and BUY 1 CALL + PUT of next week expiry whose premium should be equal to sum of 2 lots you sold ±5 points.
Best for 3-4 monthly returns. Target 1% weekly. Sell far OTM CALL and PUT where market will not reach and buy 200 points away hedges. Max profit should be 1% of deployed capital.
When you sell Out-of-the-Money CALL and PUT options together, it becomes short strangle. When you think market will be sideways then you can deploy this trading strategy.
if you think market will go down but not too much and you have capital to sell options instead of options buying choose Bear Call Spread strategy to take advantage of Theta decay too.
For sideways market and VIX under 17, short straddle can be chosen. Sell ATM CALL and PUT options at the same time to make short straddle. It’s profitable but risky trading strategy
If view is market will go up but not too much then simply sell 1 ATM or near ATM PUT and buy 1 OTM PUT Options to make a BULL PUT Spread trading strategy
Butterfly is best to capture directional move. When market is sideways and directional move is coming soon, buy 1 CALL at lower price, sell 2 CALLs at higher price and buy 1 at even higher.
Now in whichever direction market gives breakout, move that side hedge close to your selling. This way you will increase that side profit. Best trading strategy to practice.