As an options trader, I am often asked this question. In my opinion, the best way to bring in income from options on a regular basis is by selling vertical call spreads, otherwise known as bear call spreads.
My win ratio: Readers always ask me to bring them the most profitable strategies. Well, here it is.
Bear call spreads are simple to apply and analyze. But the greatest asset of a bear call spread is that it allows you to choose your probability of success for each and every trade.
This makes it pretty hard to decide which is the most profitable options strategy. Most traders, be they day traders or option traders, have one plan: they want to beat the broader stock market. There are hundreds of opinions about which is the best approach. Option trading offers huge profit potential, and so is very attractive. At the same time, many traders have lost very heavily when they launch into the world of options I did when I started!
Think about it: What type of investment offers you the ability to choose your the most profitable options odds of success?
And in every instance, bear call spreads have defined risk, so you always know how much you can make or lose on each trade. My favorite aspect of selling bear call spreads is that I can be completely wrong on my assumption and still make a profit.
By Lucas Downey Updated May 29, Traders often jump into trading options with little understanding of the options strategies that are available to them. There are many options strategies that both limit risk and maximize return. With a little effort, traders can learn how to take advantage of the flexibility and power that stock options can provide.
Most people are unaware of this advantage offered by bear call spreads. Can you explain your process for choosing trades in your bear call strategy?
I allow probabilities or odds to give my strategy bear call spreads the edge I need for successful trading. And why do bear call spreads give me an edge? Let me explain it in poker terms.
Options traders, on the other hand, realize a profit can be made in any environment, even when the market doesn't trade up or down. Options contracts are flexible tools that make this possible, though some approaches are as risky and complex as they are versatile. Writing Options One way to profit from options in any market, as well as to employ even more sophisticated strategies, is by writing options.
This means that the more inexperienced players there the most profitable options at the table, the easier it will be for the seasoned pro to take their money. Finding the consistent loser or novice trader is how the poker pros generate the bulk of their gains.
When I trade credit spreads, I take advantage of the speculation of others, typically newbies who are buying out-of-the-money calls or puts with the hope that they will eventually move into the money. There is, however, a skill in knowing who those amateurs are and what behaviors they exhibit to clue you in on their lack of experience.
In options trading, everything is laid out in the options chain — a list of option characteristics at different strike prices. But unlike poker, the participants show their hands when trading bear call spreads. This is THE advantage bear call spreads offer over any game or investment vehicle out there.
The chance of that happening is By taking the opposite side of the trade I have a If you would like to learn more about my step-by- approach to bear call spreads using a variety of trade ideas, please make sure to sign up for my upcoming webinar.
Published by Wyatt Investment Research at www.